Dáil Éireann - Volume 486 - 03 February, 1998

Written Answers. - Local Authority Loans.

190. Proinsias De Rossa asked the Minister for the Environment and Local Government the plans, if any, he has to introduce a lower fixed rate of interest for those local authority tenant purchasers who have bought their homes at fixed rates of interest of the order of 9 to 10 per cent in view of the consistently low level of interest rates and the implications of EMU which financial commentators say will lower interest rates further by at least 2 per cent in the next couple of years; and if he will make a statement on the matter. [2411/98]

Minister of State at the Department of the Environment and Local Government (Mr. Molloy): The interest rate on local authority fixed rate house purchase loans is related to the cost of [1012] long-term funds prevailing at the time the loans were advanced and is fixed for the life of the loan. It is not possible to reduce the interest rate on these loans as the cost involved would be substantial and would have to be borne by either the Exchequer, the Housing Finance Agency or local authorities.

However, borrowers of these loans may redeem them without penalty, which is a significant concession in the case of fixed interest rate loans, and refinance in the private sector, if they consider it advantageous to do so.