Ireland is considering reintroducing the tax deduction on mortgage interest, but any potential scheme is likely to be limited to borrowers hardest hit by rising interest rates, Prime Minister Leo Varadkar said on Friday.
The government ended a broader scheme in 2020 that provided tax relief to borrowers who had taken out mortgages in the run-up to and after the Irish banking crash of 2008.
With each interest rate increase by the European Central Bank, ministers have come under pressure from opposition politicians to reopen the scheme, most recently on Thursday when policymakers pushed the euro zone’s key rate to a record high of 4%.
“So, I think if we are going to do something to help people with mortgage interest, we really need to focus on those who are paying the highest interest rates and those at risk of losing their homes,” Varadkar told reporters.
Varadkar said the details have not been worked out yet, but the relevant ministers are working on it in the lead-up to the 2024 budget, which will be published on October 10.
Data from the Central Bank of Ireland on Friday showed that the total number of mortgages in arrears in the three months to June fell by 4% QoQ. However, this included an increase in the number of people unable to pay for between 90 days and a year.
Derville Rowland, Deputy Governor of the Central Bank of Ireland, said that while the ongoing decline was welcome, the regulator remained “vigilant for new issues in the current economic climate.”