Reintroduction of tax relief on mortgages needs to be considered, O’Brien says

The reintroduction of a tax relief on mortgages does need to be considered, Minister for Housing Darragh O’Brien has said. He said the budgetary process was the most appropriate way to consider further action in relation to the cost-of-living crisis and mortgage interest relief.

The Minister was responding to Sinn Féin deputy leader Pearse Doherty during Leaders’ Questions in the Dáil on Thursday, who said a single mother had contacted his party recently and her monthly mortgage repayments had risen by €700 per month. “That’s an increase of €8,400 per year,” Mr Doherty said. “She fears losing her home or going into arrears. She says she sees no future here for herself or her child.”

The Donegal TD noted the European Central Bank (ECB) was expected to increase its interest rates for the eighth time since July 2022, which was “another massive blow” to workers and families income. Action had to be taken, and the Government had its “head in the sand” despite families seeing mortgage payments “increase by thousands and thousands of euro”.

[ ECB tightens squeeze on mortgage holders with further 0.25% rate hike ]

“As hundreds of thousands of households anticipate another letter in the coming days telling them that their mortgage payments has increased again, the eighth letter that many of these families will get in less than a year, isn’t it time for the Government to get your heads out of the sand and to actually take action to support these families who are trying to keep a roof over their head?”

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Mr Doherty asked Mr O’Brien would the Government introduce mortgage interest relief to support households or was “your message the same message over the last number of months – that you are on your own”.

In response Mr O’Brien said the last time there was mortgage interest relief in 2008, there was a “full year cost of €700 million”.

“It would be a very significant intervention, not one that anyone should take lightly or come forward on an ad hoc basis to do so,” he said.

However, the Fianna Fáil TD said the reintroduction of a tax relief on mortgages does need to be considered. “There’s no question that there are families and individuals suffering because of the mortgage rate increases but it can’t be done on an ad hoc basis, as you’ve suggested to deal with nearly every problem.”

Mr O’Brien said there were “questions about fairness” in terms of who would receive such relief and who doesn’t and at what levels they get it at.

“Whilst tracker mortgage holders and some on variable rates have unquestionably been affected by higher payments, recent Central Bank research showed that having benefited from lower repayments over the years the increases they have now faced move their repayments up roughly to the level of other borrowers. So fairness and equity is important in any measures that we would take.”

Mr O’Brien added that the Minister for Finance Michael McGrath and senior officials recently met with providers in the non-bank sector and raised concerns about the impact of recent mortgage interest rate rises on borrowers and the potential this may have to increase mortgage arrears. That is a real situation and Minister McGrath has been dealing with it. The Minister emphasised that it is a priority of Government to reduce mortgage arrears and noted that the higher rates being charged by non-bank lenders act against achieving this objective.”