The Minister for Finance has said the latest European Central Bank interest rate increase will undoubtedly add pressure to many households who already are carrying the burden of previous interest rate hikes.
This afternoon, the ECB lifted its deposit rate to 4% from 3.75%, taking it to an all-time-high.
Michael McGrath said the Government will be bringing forward a set of measures in the budget in October aimed at helping with the cost of living.
“I can’t comment on any specific measures at this point in time,” he told RTÉ News.
“But our focus so far has been to try to press down costs where we can in healthcare, transport, education, childcare and also to give people relief in the form of income tax.”
“So we’re looking at a whole range of different measures and there will be a package that we will bring forward in the budget to assist with the cost of living which we know remains really high for many people at this time.”
The minister added that it is now vital that the banks and the non-banks lenders now work “in a genuine spirit of cooperation with mortgage holders who are facing distress”.
He said nobody should be allowed to fall into mortgage arrears if they are genuinely making an effort to repay their mortgage.
“That’s why we have a code of conduct on mortgage arrears, why we have agreements in place,” he stated.
“So we expect that now to be fully implemented.”
The minister also said it is broadly recognised that we are now either at or very close to the peak of the interest rate cycle.
He said higher rates are acting as a drag on the global economy, designed to bring the demand and supply more into equilibrium.
“But ultimately it is motivated by a desire that we all share which is to bring about a reduction in inflation to 2%,” he said.
“So the medicine does hurt, but ultimately if we don’t get inflation down, we are all poorer in the medium to long run.”
Sinn Féin spokesperson on Finance Pearse Doherty TD has called for the introduction of temporary and targeted mortgage interest relief to support households., as he said that action is needed to “address mortgage misery”.
He described today’s news as a “massive income shock for households in the grip of a wider cost of living crisis” and called for a temporary and targeted mortgage interest relief to be introduced in the Budget.
“Before today’s announcement the Central Bank estimated that one in five households would see their annual mortgage costs spiral by more than €5,700 as a result of rate hikes,” he said.
“With two in five seeing their annual mortgage costs rise by more than €3,000.
“With today’s announcement, these costs will increase further for so many.
“This is a massive income shock for households in the grip of a wider cost of living crisis.”