The government extended a mortgage tax break despite officials advising it had no clear policy rationale and that it risked pushing up house prices.
A pre-budget submission warned continuing the scheme could discourage banks from lowering interest rates and simply boost their profitability.
Despite the advice, then-Minister for Finance Paschal Donohoe approved a two-year extension of mortgage interest tax relief in last year’s budget.
The temporary relief had originally been introduced on a one-year basis to help homeowners hit by successive interest rate rises.
However, in advance of last year’s budget, Department of Finance officials recommended it not be extended.
It said: “As was outlined by officials in advance of its introduction, and its further extension, there is no clear policy rationale to support this relief.
“The available research, including that produced by the [Central Bank] and the OECD, have highlighted the negative implications of both the introduction of such a relief, and its extension beyond one year.”
A memo from the Central Bank said it represented a “poor use of taxpayer funds” and could not be targeted to those who needed it most.
It warned that in many cases those benefiting from the relief were not “under [financial] stress” and were generally in higher income groups.
Officials warned as well that a further extension could be “taken as a signal to its long-term future” just as other cost-of-living measures were phased out.