Variable mortgage rate cut for low income families
Published 15/06/2015 | 02:30
Thousands of low-income homeowners in local authority houses have had their variable mortgage rates cut, the Irish Independent can reveal.
The Board of the Housing Finance Agency (HFA) has decided to decrease its variable mortgage interest rate charged to local authorities by 0.2pc.
Those local authorities have in turn been instructed by Environment Minister Alan Kelly to pass the reduction on directly to their borrowers.
Up to 13,700 homeowners stand to benefit from the cut, which will drop to 2.55pc from July 1.
The cut means that households will save €17 per month, or €204 a year, on every €100,000 of the mortgage.
This rate is 1.5pc lower than the standard variable mortgage rate and is the lowest rate available currently in the domestic mortgage market.
Commenting last night on the move, Mr Kelly said the rate cut will mean a real difference to those who will benefit from it.
"I am pleased with the HFA decision to reduce its rate, and that this is being passed on in full to local authority borrowers. The reduction will have real meaning for 13,700 households with a local authority variable mortgage," he said.
The minister also welcomed the HFA's decision to reduce its non-mortgage variable lending rate by 0.25pc with effect from the end of the month, which is also to save councils around the country €7.5m in interest payments.
"This rate cut will benefit local authorities who use these loans to finance local authority social housing schemes.
"This HFA move will directly assist in increasing social housing supply and achieving the delivery targets the Government has set out in Social Housing Strategy 2020," Mr Kelly said.
In total, 17,844 local authority mortgages have been issued to over 28,000 named borrowers, figures released by Mr Kelly's department show. Approximately, 13,700 of these local authority mortgages are charged at a variable mortgage interest rate. The remainder of the mortgages have interest rates that are fixed or are set in accordance with a tailored loan scheme.