Vol. 509 No. 4
103 Mr. McGrath asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the fact that some financial institutions who have advanced mortgages to householders at fixed interest rates to purchase family homes will charge an additional penalty on such borrowers if they wish to redeem their mortgage in full; her views on this penalty; and if she will make a statement on the matter. [20767/99]
Section 121 of the Consumer Credit Act, 1995, specifically prohibits financial institutions from imposing redemption fees on borrowers who wish to redeem their housing loans, mortgages, early except in certain circumstances. The exceptions to the prohibition, which are set out in section 121(2) of the Act, occur in circumstances where the loan agreement provides that the rate of interest: (a) may not be changed, or (b) may not be changed over a period of a least one year, or (c) may not, for a period of at least five years, exceed the rate applicable on the date of the making of the said agreement by more than two per cent.
Where financial institutions apply redemption fees in accordance with the circumstances of section 121(2), they are obliged to provide a statement outlining how the charge is to be calculated. It is a requirement that this statement be included in the mortgage application form and in other documents, such as loan approval forms, produced by the institutions.
Section 149 of the Consumer Credit Act requires credit institutions to notify the Director of Consumer Affairs of all charges for services to customers. This includes mortgage lenders in relation to the manner in which they calculate redemption fees in respect of fixed rate loans which are redeemed early.
