TAOISEACH LEO VARADKAR has said that the Government will examine mortgage interest relief as part of the next Budget, as the European Central Bank (ECB) confirmed a further interest rate hike.

The ECB confirmed this afternoon that interest rates would be increased by 0.25%, marking the seventh consecutive increase by the bank.

Speaking to reporters this afternoon, Varadkar said that the rate hike was more bad news for mortgage holders.

“I know it’s going to be further bad news for mortgage holders, who are going to see their rates go up again and particularly people on trackers who have seen mortgages go up a lot in the past couple of months. It’s been a very big hit for them as well,” Varadkar said.

However, he said that it was being done to bring down inflation across the eurozone and that this was “good for everyone in the round”.

Asked about introducing mortgage relief to help households cope with the increase, Varadkar said that the Government would examine it as part of the overall budget package in October.

The Government had previously had mortgage relief in effect for mortgage holders, but the tax relief was abolished in December 2020.

“Any decision on reintroducing mortgage relief would have to be considered as part of the budget in October, so it is something we will consider,” Varadkar said

“I do need to be frank with people, the tax package can only be so big. We want to do something obviously to help workers who are paying an awful lot of income tax in Ireland, more than they would in other English speaking countries.”

The Taoiseach said that the Government wanted to honour the Programme For Government commitment to continue to reduce income tax by raising income tax bands. 

Varadkar added that while mortgage relief would be considered, he did not want that to be seen as a promise that it would be introduced.

“I can’t promise that at this stage.”

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Sinn Féin proposal

It comes as Sinn Féin are continuing to press the Government around reintroducing mortgage relief, with the party’s finance spokesperson Pearse Doherty arguing that other tax changes have been made outside the ordinary budgetary cycle.

The party had previously brought forward a motion to reintroduce targeted relief, which the Government rejected.

Doherty said that the Government had changed the tax treatment for solar panels, petrol, diesel as well as for the hospitality industry.

“All of this is outside the normal budget cycle at a cost of hundreds of millions of euro so the argument that nothing can be done to support these families in the here and now with rising mortgage costs before October is simply a nonsense,” Doherty told the Dáil this afternoon.

In response, Tánaiste Micheál Martin said that while mortgage holders were facing pressure, Sinn Féin’s proposals were “knee-jerk”.

“There is no doubt that pressure is increasing on families with mortgages but I always say that we must be mindful not to rush into the Sinn Féin knee-jerk response to issues that emerge from time to time,” Martin said, adding that Doherty needed to look at the broader measures brought forward by the Government in Budget 2023.