Council mortgages slashed - but bank rates still stubbornly high
Published 13/06/2016 | 02:30
Thousands of people with mortgages from local authorities will benefit from a sixth cut in the interest rate.
Housing Minister Simon Coveney is set to announce today that the interest on city and county council mortgages is being slashed by 0.25pc.
This will take the rate down to 2.3pc, half of the standard variable rate charged by the likes of Bank of Ireland and Permanent TSB.
Some 13,700 households will benefit from the reduction, which takes effect from the beginning of next month.
These people have an affordable home, tenant purchase, shared ownership or private purchase loan from their local authority.
Councils lend to people unable to get funding from a bank, provided their income is below certain limits.
Mr Coveney said this was the sixth consecutive interest rate decrease.
The decision to cut the lending rate was made by the Housing Finance Agency, a body that funds city and county councils.
Mr Coveney has instructed local authorities that the rates reduction should be passed on to the borrowers.
"A local authority mortgage holder with a €100,000 mortgage will have an extra €21 in their pocket each month. The rate cut is evidence of an extremely competitive path to home ownership being offered by the Housing Finance Agency," the minister said.
The move to cut local authority mortgage interest is in contrast to some of the banks, which are refusing to move on their variable rates. This is despite TDs passing legislation that aims to give the Central Bank new powers to tackle high interest rates, in a move that will provide hope for 300,000 variable-rate customers.
The Fianna Fáil bill was reintroduced in response to a failure by many of the main lenders to pass on lower interest rates set by the European Central Bank.