The variable mortgage interest rate for homeowners with loans from local authorities is being cut by 0.2 per cent.
The move, which follows a decision by the board of the Housing Finance Agency (HFA) to cut the rate it charges to local authorities, has been welcomed by Minister for the Environment Alan Kelly.
The cut will bring the variable mortgage interest rate charged to local authority borrowers down from 2.75 per cent to 2.55 per cent. The new rate is 1.7 per cent lower than the standard variable mortgage rate and is the lowest rate currently available in the domestic mortgage market.
“I am pleased with the HFA decision to reduce its rate, and that this is being passed on in full to local authority borrowers,” Mr Kelly said.
“The reduction will have real meaning for 13,700 households with a local authority variable mortgage. The saving amounts to €17 per month on a typical mortgage of €100,000.”
The Minister also welcomed the HFA’s decision to reduce its non-mortgage variable lending rate by 0.25 per cent with effect from July 1st.
“This rate cut will benefit local authorities who use these loans to finance local authority social housing schemes. The cut will save local authorities approximately €7.5 million per annum.”
There are currently 17,844 local authority mortgages, with approximately 13,700 of these charged at a variable mortgage interest rate. The remainder have interest rates that are fixed or are set in accordance with tailored loan schemes.
The main mortgage currently available from local authorities is the standard annuity for lower income first-time buyers. It can be up to 97 per cent of the house price subject to a maximum loan of €220,000 and subject to repayment conditions related to income.
First-time buyers may qualify for a local authority mortgage if they cannot get a loan from a bank or building society.
A single income household can qualify if the gross income is €50,000 or less while a two-income household can qualify if the combined income is €75,000 or less.