Mortgage relief benefit may be revived, but only for those in difficulty

The Government will consider Budget 2024 help for people squeezed by the relentless rise in mortgage rates, but the introduction of interest relief for all mortgage holders is unlikely.

Instead, officials are understood to be examining the possible revival of a scheme similar to mortgage interest supplement — a social welfare benefit previously paid to people in difficulty with their mortgages.

Ministers are discussing a plan along the lines of the mortgage interest supplement, a payment made by the department of social welfare, now the Department of Social Protection, until 2017 which provided short-term support for thousands of eligible people who were unable to meet mortgage interest repayments.

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While more than 12,000 borrowers benefitted from the scheme in the last year before it was closed to new entrants, at an annual cost of €43 million, it would be a far cry from the sort of universal relief being sought by the opposition for all mortgage holders. The Government is wary, however, of a broad scheme giving help to those who do not need it, and would come with a high price tag.

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Prior to being shelved by the Fine Gael-Labour coalition during the period of austerity after the financial crash, the supplement was only payable to those who had agreed with their lender and complied with an alternative payment arrangement for a cumulative period of at least 12 months.

Discussions within Government are understood to be focusing on a proposal that would avoid fears of creating a dependency on the scheme. There was some criticism among officials that the previous scheme disincentivised people to take up jobs or work more hours because they could lose access to the benefit.

[ Budget 2024: Looks like a tax cut of €800 to €850 a year for middle earners ]

[ Budget 2024: Leo Varadkar rules out ‘broad-based’ mortgage interest relief ]

No decisions have yet been taken on any new scheme, and weeks of intense wrangling between politicians and officials lie ahead before the October 10th budget. But Taoiseach Leo Varadkar gave a clear indication that the move is likely.

“I think if we are going to do something to help people with mortgage interest, it really should focus on those who are paying the highest rates and those who might be at risk of losing their homes. But the detail that hasn’t been worked out,” said Mr Varadkar at the Fine Gael parliamentary party think-in in Limerick. “I think if we are going to do something to help people on mortgage interest, it really should focus on those who are paying the highest rates and those who might be at risk of losing their homes.”

The Taoiseach said the detail is being worked on by Minister for Finance Michael McGrath and by Minister for Social Protection Heather Humphreys at the moment — an indication that any measure is likely to be a means-tested social welfare benefit, rather than a general tax measure.

Mr Varadkar also indicated that if petrol prices go above €2 a litre the Government may consider postponing scheduled increases in excise rates on fuel, due at the end of October. Earlier this week at the Fianna Fáil think-in, Minister for Finance Michael McGrath made a similar suggestion.