Ireland is weighing the reintroduction of mortgage relief as part of this year’s budget package to ease the financial pressure on borrowers as the ECB’s rate tightening continues.
(Bloomberg) — Ireland is weighing the reintroduction of mortgage relief as part of this year’s budget package to ease the financial pressure on borrowers as the ECB’s rate tightening continues.
Concessions for mortgage holders will be among options considered to help people in response to cost of living pressures in next year’s budget, Irish Prime Minister Leo Varadkar told reporters on Thursday.
But the reintroduction of relief, which was phased out in 2020 can’t be “promised,” he said.
The government’s proposal reflects growing concern over the impact a series of ECB rate increases have had on mortgage customers.
Higher financing costs have particularly hit people on historically cheaper tracker mortgages, which move in tandem with the ECB’s main refinancing rate and have become significantly more expensive over the last year.
The ECB raised interest rates by a further 25 basis points on Thursday and signaled that more hikes are coming.
READ MORE: ECB Vows More Hiking to Come After Slowing Tightening Pace
Ahead of the decision, Finance Minister Michael McGrath warned rising rates could lead to an increase in mortgage arrears in Ireland.
The government would consider “all options” in the next budget to help those facing them, he added, according to RTE. Loan delinquencies remained elevated for years following the financial crash but have improved more recently.
The proposal is part of a range of initiatives in Europe to ease the pain on consumers and avoid further disruption in housing markets as higher interest rates and inflation squeeze households.
French policymakers are weighing changes to mortgage rules to ease credit distribution while in Poland households have been allowed to skip some payment, burdening the country’s banks.
While Irish banks have not passed on the full extent of interest rate hikes to mortgage holders, borrowing costs have increased over the last year and lenders have been criticized for keeping deposit rates low, and Central Bank of Ireland governor Gabriel Makhlouf last month said that meant depositors were “subsidizing” mortgage holders.
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