Talking to my dad over the weekend gone by, we were discussing the impact of the most recent budget on ourselves personally. There wasn’t anything good we could say between us unfortunately.
One item that did come up however, that doesn’t have an impact on either of us, was the removal of mortgage interest relief from those with mortgages for more than 7 years.
He felt that this was an extremely unfair measure and was surprised that it hadn’t received very much coverage in the budget aftermath – unlike the budget unrelated coverage of the fixed rate mortgage bail-out campaign.
On the other hand, I didn’t feel that it should be that much of an issue. My view would be that after 7 years, most mortgage holders will have been working long enough to be able to withstand such an increase in their expenses.
If mortgage interest relief was a means to aid first time buyers to afford their homes, then there is no need for the government to be involved in part-paying the mortgage repayments of the whole country – particularly those that are no longer first time buyers.
Combining the two current mortgage issues (fixed rate mortgages and mortgage relief after 7 years), there could be cause to review the potential difficulties of mortgage holders who, 7 years ago, took out a fixed rate mortgage. These people would now be hit with huge charges if they were to attempt to move to a cheaper variable mortgage as a means to reduce their costs now that the mortgage interest relief has been taken from them.
But even then, I don’t believe there are too many people that would be in this situation. As of today, there are over 10 mortgage providers in the country at the moment, and that I can find, only 3 of them provide fixed rate mortgages of more than 5 years – 10 years at EBS, AIB and permanentTSB.
I’m waiting for information from the Financial Regulator, the CSO and the IBF to see how many people did take out 10 year fixed rate mortgages in 2002, 2003 and 2004. I’m willing to hazard a guess that there aren’t that many people in that category.