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THOUSANDS of homeowners on affordable housing mortgages have yet to benefit from a cut in interest rates last month. The European Central Bank (ECB) lowered interest 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, has not yet passed on the cut.
The Government says it could be "a number of weeks" before the agency makes a decision, meaning thousands of mortgage holders face an anxious wait to see if their mortgage bill will be reduced.
A spokesman from the Department of the Environment said: "In general, following consideration by the HFA, the rates charged to local authority borrowers are normally adjusted by the board in line with movements in ECB rates.
"However, given that the correlation between ECB rates and interbank rates is atypical and volatile at present, the agency, in responding to movements in ECB rates, must give careful consideration, on each occasion, to the fluctuating relationship between its lending rates and the cost of funds."
The HFA is "closely monitoring" the impact of the cut on interbank rates before a decision can be made. It said that its position on rates "should be clear within a number of weeks".
It did, however, say that the rate for local authority borrowers will be 2.25% on June 1, a rate that does not include the May interest rate cut.
The total value of affordable housing loans issued between January to May 2009 was €26.7m (€46.1m for the corresponding period in 2008). The number of local authority house sales that were completed last year plunged to 596 from 1,231 in the previous year.
The Government received 1,785 applications for affordable housing last year and approved 1,416.
Figures released by the Central Bank last week showed the first net fall in mortgage lending since 1990. The figures for April from the Central Bank confirm the property market has slowed to a trickle.
It was the first time that repayments on existing mortgages has been greater than new mortgage lending since the Central Bank began this monthly statistics series in 1990.
The figures show that, overall, mortgage lending fell by over €100m last month. Also in April house prices plunged by the fastest rate on record with more than €60,000, on average, being wiped off their value since a peak two years ago.
Labour spokesman on housing and local government, Ciaran Lynch, said the delay in passing on the interest rate cut is "completely inexcusable".
He called on the minister to rectify the situation immediately. |
