No ECB rate cut for owners of affordable homes

UP to 10,000 homeowners on affordable housing mortgages will not benefit from the latest cut in interest rates.

The European Central Bank (ECB) lowered rates by a quarter of a percentage point on May 7 but the Housing Finance Agency (HFA), the state-owned company that lends money to local authorities, is not planning on passing on the cut.

A person with an average mortgage of €250,000 at a variable rate of 3.55% over a 35-year term will now miss out on monthly savings of almost €36.

In response to a parliamentary question from Sinn Féin, the Department of the Environment said the HFA’s cost of funds has not fallen sufficiently to allow the cut to be passed on.

Sinn Féin TD Caoimhghín O Caoláin said the decision is very disappointing.

“Local authority house purchase borrowers are those on low incomes who could not access a mortgage through any of the commercial institutions. They are the people who most need to benefit from the interest rate decrease. The minister has power to ensure that the rate is passed on and has failed to exercise it.”

The Government received 1,785 applications last year and approved 1,416.