Bringing back mortgage interest relief would be counter-productive to efforts by the ECB to rein in rising prices, a leading economist has claimed.

The ECB raised interest rates by another half a percentage point - a move that saw the annual repayments of approximately 250,000 tracker mortgage customers go up by an average of €1,000 a year.

Sinn Féin has called on the Government to introduce mortgage interest relief - a tax relief measure that came to end in January 2021 - to lessen the blow for cash strapped families.

But Séamus Coffey, an economics lecturer at University College Cork, said such a move would be pointless.

He said: "Do we want consistency on economic policy? We have monetary policy and we have our fiscal or budgetary policy looking at Government tax and spending measures.

In Association with

"If you have the ECB increase interest rates to take some heat out of the economy, and we're just waiting to fill that hole with fiscal policy with more Government spending, or tax cuts, then they're working opposite to each other," he told RTÉ radio.

Mr Coffey also described mortgage interest relief as an "untargeted measure".

"We have hundreds of thousands of borrowers who haven't seen their interest rates increase at all because they're on fixed rates.

"Yes, fiscal policy should respond to the inflation, the interest rates and things we're seeing happening, but it should be targeted and measured. We should be looking [to help] those on the lower income brackets.

"For tracker rate mortgages, I've seen their interest rates go from 1% up to 3% or 4%. They've had the benefits of those low interest rates for a long time. Are we going to say they're going to be fully insulated, and offer taxpayer support for people who have been on low interest rates for quite a long time?"

In February, Sinn Féin's finance spokesman Pearse Doherty said reintroducing mortgage interest relief would help tens of thousands of families across the country.

He said: "The ECB increased its interest rate again, the sixth rate hike since July.

"This further rate hike will immediately affect more than 250,000 borrowers who have seen their monthly repayments increase by hundreds of euros since January.

"It will also hit the pockets of thousands of borrowers whose mortgages were sold to vulture funds without their consent. Despite false promises by the Taoiseach and Government ministers, these mortgage holders are worse off as a result of these sales, with no option to switch or fix their rates, and will face interest rates as high as 8% in the next few weeks.

"Mortgage-holders will be paying thousands of euros more in interest this year - households that are already struggling under the cost of living crisis," he warned.

"Already, Irish mortgage holders are charged interest rates that are 50% higher than the European average.

"It is now time to introduce targeted and temporary mortgage interest relief to cushion the blow of these rising interest costs.

"Already the Government allows landlords to claim tax relief against 100% of their mortgage interest, with further tax cuts reported to be on the way.

'As the ECB prepares to increase interest rates again today, the time has come to introduce this temporary and sensible measure to support those who are really struggling," he said.

Taoiseach Leo Varadkar recently ruled out any restoration of mortgage interest relief. He said: It's not something we are considering, but it's not something we rule out for the future.

"The Government would be happy to consider any proposals the Opposition might bring forward, but it would have to be costed."

Mortgage interest relief cost the Exchequer €700m a year before it was phased out.

Photo: Séamus Coffey, an economics lecturer at University College Cork