Budget 2024: ‘Tailored’ mortgage relief could easily unravel on Government

When Michael McGrath and Paschal Donohoe get up today to give their budget speeches, they will be treading a fine line.

On the one hand, the Government is keen to present itself as the prudent guardian of the State’s finances while trying to soften the ongoing pressure of the cost-of-living crisis. This is complicated, of course, given that it is set against a background of significant surpluses despite the recent setback in corporation tax take.

On the other hand, it is loathe to give any electoral advantage to Sinn Féin. As always, all departments are looking for more than they are pencilled in to receive and the Ministers’ party backbenchers strongly favour spending now rather than leaving those surpluses for Sinn Féin to reap an electoral benefit.

Divisive measure?

Nowhere is this more evident than in its approach to mortgage bills. Housing has been a key vulnerability of this Government and Budget 2024 is close to their last chance to make a positive impression. But the potential cost of doing so scares them.

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So, instead, we are likely to see a measure that will be divisive without making anyone truly happy.

As tested in the court of public opinion via traditional budget leaks, the Ministers will announce plans to offer homeowners on variable rate mortgages modest relief (a figure of up to €1,250 has been mentioned though it may end up slightly higher) to cover the impact of the 10 rate rises announced by the European Central Bank over the past 16 months.

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It will provide some succour to the small proportion of homeowners on variable mortgages — not least as some of these are likely to be among those paying the highest interest rates with mortgage servicing firms operating on behalf of private equity groups. And it will also give some relief to those on tracker loans who have felt the full impact of the ECB rate rises.

But whether it will offer enough to fundamentally improve the position of those in either group remains to be seen.

Those excluded

Meantime, the measure, we are led to believe, will exclude holders of fixed mortgages — who are carrying the burden of two-thirds of the €79 billion outstanding on loans against family homes.

In its efforts to show good husbandry, the Government runs the risk of leaving everyone disgruntled. This would leave the “tailored” mortgage relief in the same box as the plethora of failed housing initiatives that have come to mark this administration.