Mortgage Interest Tax Relief

Mortgage Interest Relief Proposal

The Proposal:

We will increase mortgage interest relief to 30% for First Time Buyers in 2004-08 (from the current sliding scale of 20% to 25% depending on the year the mortgage was taken out), financing in part by bringing forward the abolition of relief for new buyers from June 2011.

The proposal will save these homeowners in distress up to €166 per month.

Reasoning Behind the Proposal:

The reasoning behind Fine Gael’s mortgage relief policy in our banking policy is to help the near 300,000 homeowners in negative equity.

Rising mortgage interest rates are pushing more and more homeowners into severe arrears. Already over 40,000 mortgages are in arrears over 90 days and 28,000 of these are over 180 days.

Rather than a populous stunt this is more of an effort to deal with a severe mortgage crisis. Our fragile banking system cannot deal with a wave of mortgage defaults. Considering the State now owns some of the banks, a wave a mortgage defaults would eventually crash onto the taxpayer and this is something we cannot afford.

In addition, if people are forced out of their houses now some will most likely end up on social housing waiting lists which are already extensive and will add a further cost to the taxpayer. It is in the national interest to aid these home owners at this time.

Fine Gael did not cause this crisis but we must recognise that the Fianna Fail Government encouraged people to buy with promises of a soft landing on the property market and with a lot of pro-property ladder rhetoric. The fact Fianna Fail was aided by a complacent banking sector and an incompetent regulator means that many young families were luring into the property market by trusting the establishment.


We believe this will cost the exchequer €120 million annually, but that will be offset by the earlier than planned abolition of mortgage interest relief for new first time buyers. Housing prices have fallen massively from the highs of the boom and Government support for paying for new mortgages should not be needed after June of this year. In time the relief will be phased out.

Full details of our fiscal plans will be released next week.