Dáil Éireann Debate, Wednesday - 3 February 2010
199 Deputy Bernard J. Durkan asked the Minister for Finance if mortgage borrowers are likely to become the victims following the overuse of tracker mortgages by lending agencies; the action or actions he proposes to take to ensure that injudicious lending practices do not result in punitive rises in interest rates; and if he will make a statement on the matter. [5560/10]
View answer200 Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he proposes to monitor mortgage interest charges with particular reference to recently announced increases; if it is intended or expected that such increases are likely to continue notwithstanding the low interest rates set by the European Central Bank; and if he will make a statement on the matter. [5561/10]
View answerI propose to take Questions Nos. 199 and 200 together.
As Minister for Finance I have no function in interest rate decisions by commercial lending institutions. The level of mortgage interest rates reflect a broad range of factors including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution's overall funding.
I have already made my views known on the decision by Permanent TSB to increase variable interest rates by 0.5% with effect from Monday 1st February. I repeat I am disappointed by this decision. Unfortunately this increase reflects commercial market realities including the increased cost of accessing funds. A balance must be maintained by Government between influencing private banks through the bank guarantee scheme and other financial support incentives while at the same time ensuring that the day-to-day running of these institutions recognise commercial realities.
The guarantee means that the covered institutions can raise funds more cheaply. This benefits all of their customers and such institutions are paying the State for the costs of the guarantee. The Government has decided to implement a significant programme of reform in the structures of financial regulation and I will be bringing proposals to Government in this regard in the near future.
