FINANCE MINISTER MICHAEL McGrath has announced that the Government is to introduce a one-year Mortgage Interest Tax relief measure for homeowners who have an outstanding balance on their primary home between €80,000 and €500,000.

Homeowners who were in this position as of 31 December will be eligible for measure.

Relief will be on offer on increased interest paid on mortgages this year as compared with the amount paid in 2022, at the standard rate of 20% income tax.

It will be capped at €1,250 per property.

Roughly 165,000 mortgage holders will stand to benefit from the measure, at a cost of €125 million to the state.

McGrath said the interest tax relief plan for homeowners comes as the Government is aware of the impact of increasing interest rates on many people.

He added, however, that it is not possible for the Government to fully mitigate the impact of rising rates on homeowners.

“What we have experienced in the past 14 months is exceptional in the history of monetary union and ten successive interest rate increases have put many mortgage holders under considerable pressure,” he said.

Sinn Féin has repeatedly called for help for mortgage holders in the budget, and had even called for measures to be brought in on an urgent basis before now. 

Earlier this year, the party put forward a motion in the Dáil that would have seen a temporary and targeted scheme put in place. 

The party called for interest relief equivalent to 30 percent of increased interest costs relative to June 2022, to be provided for specific homeowners up to a maximum of €1,500 a year.

According to costings done by Sinn Féin and published in April such a scheme would cost up to €400m.

Homeowners whose mortgages are held by so-called vulture funds are generally more exposed to interest rate shocks than others, with vulture funds quicker to pass on the interest rate rises to variable rate mortgage holders than high street lenders.

According to figures released by the Central Bank in May this year, vulture funds and non-bank lenders account for over 16% of the total Irish mortgage market.

In August, the European Central Bank announced a ninth successive interest rate hike. At that time, it was announced that the main rate for pricing mortgages would increase to 4.25% in a bid to tackle inflation, the highest it has been since May 2001.