More than 135,000 mortgage holders excluded from new interest relief scheme

About 137,000 mortgage holders look set to be excluded from the Government’s new mortgage interest scheme set to help households struggling with higher rates, it has emerged.

Sinn Féin has now called on the Government to change the scheme after it emerged a large tranche of homeowners will be excluded because their outstanding balance is below €80k.

The relief, announced as part of Budget 2024, will apply to those with a home loan of between €80,000 and €500,000 at the end of last year and will cover changes to mortgage repayments over the course of 2023, up to a maximum of €1,250.

The scheme will operate for one year only and will be based only on the increased amount of interest paid in 2023 compared to 2022.

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New information obtained by Sinn Féin spokesman on finance Pearse Doherty shows that there are 253,400 mortgage accounts with balances below €80,000. The Department of Finance has confirmed that an estimated 137,800 of these will have faced a higher interest rate bill this year.

“From information I received by the Department of Finance, the Government have locked 137,800 mortgage accounts out of the mortgage interest relief scheme announced on budget day,” Mr Doherty told The Irish Times.

“This is one in five of all primary dwelling home mortgages. These are households that have seen their mortgage costs rise, many by more than €1,000. This unfair exclusion should be reversed by the Minister for Finance. It is simply not fair to exclude over 100,000 mortgage-holders from this relief despite their mortgage costs rising during a wider cost of living crisis.”

In response to Mr Doherty, Minister for Finance Michael McGrath said that officials used data provided from the Central Credit Register when they were setting up the scheme. This data show that about 208,000 private dwelling home accounts will be eligible for the new mortgage interest scheme.

But for those with balances below €80,000, it is estimated that there are 253,400 such mortgage accounts, of which an estimated 137,800 are projected to have a higher interest bill in 2023 compared to 2022.

The department said that “some” of those 137,800 accounts may be covered by the scheme.

“This is because some lower-balance accounts, such as top-up mortgages, may be part of the same private dwelling home mortgage facility as an account of higher value.” The department said it is not possible to quantify how many top-up accounts could be eligible because of “data limitations”.

The Coalition has come under pressure from Sinn Féin to change the scheme but has defended excluding those with balances below €80,000.

In response to a recent parliamentary question, Mr McGrath said it was “not possible or desirable for the Government to alleviate the full impact of the increased interest rates for all mortgage holders”.

“This Government is of the view that taxpayers with mortgage balances of less than €80,000 on 31 December 2022 are in general more likely to be in a relatively strong financial position in comparison to those with larger mortgage balances. Therefore, it is reasonable to expect that they should have greater capacity to absorb the impact of the recent increases in mortgage rates.

“In addition, such individuals are likely to have significant amounts of equity built up and have relatively low ‘loan-to-value’ ratios. This means that such individuals should have better opportunities to switch their mortgages and obtain more favourable interest rates, which will ultimately reduce their interest liability without the need for Government intervention.”

Mr McGrath said that if the qualifying threshold for mortgage balances had been set below €80,000 then it “would have resulted in a less targeted scheme and as a consequence increased the cost on the exchequer”.