Reintroduction of Mortgage Interest Relief Considered by Irish Government After ECB Rate Hike

The recent decision by the European Central Bank (ECB) to raise interest rates for the seventh time since last July has put immense pressure on mortgage holders in Ireland. As a result, the reintroduction of mortgage interest relief is currently being negotiated within the Government ahead of the upcoming budget, according to Taoiseach Leo Varadkar. While he did not promise anything, Varadkar confirmed that the measure would be “under consideration”, and political sources speculate that the Government is feeling strong pressure to offer relief to mortgage holders. The Department of Finance had pushed back against the idea last year, but with further ECB rate rises expected before the budget in October, mortgage interest rates are expected to remain a significant issue. Mortgage interest relief was phased out between 2009 and 2020 following the financial crisis, but Varadkar’s intervention has put the potential move firmly on the political agenda. While an official scheme could cost the exchequer about €500 million a year, Varadkar suggested any potential scheme would have to be applicable to all mortgage holders, and not only those with tracker mortgages who have been most affected by the interest rate increases. The recent rate rises have meant that some people are paying thousands of euros more each year on their mortgages than they were before. However, the rises have not been passed on to savers, something that AIB chief executive Colin Hunt explained by noting that the bank had not passed on the full extent of the hikes to mortgage borrowers either. All eyes will be on the Government to see if they take action and offer relief to those hardest hit.