Dáil Éireann Debate, Wednesday - 30 April 2014
90. Deputy Clare Daly asked the Minister for Finance if he will ensure that the banks pass on ECB interest rate cuts to their variable mortgage holders, as they never have a problem in passing on the increases. [19360/14]
View answer120. Deputy Eoghan Murphy asked the Minister for Finance if there has been any progress by his Department or by the office of the Financial Regulator or by the Central Bank of Ireland in dealing with the banks on the issue of variable rate mortgages, the cost of which has risen disproportionately in recent years and contrary to market forces. [19661/14]
View answerI propose to take Questions Nos. 90 and 120 together.
Firstly, I must confirm to the Deputy that the lending institutions in Ireland - including those in which the State has a significant shareholding - are independent commercial entities. I have no statutory role in relation to regulated financial institutions passing on the European Central Bank interest rate change or to the mortgage interest rates charged. It is a commercial matter for each institution concerned. It is not appropriate for me, as Minister for Finance, to comment on or become involved in the detailed mortgage position of mortgage holders.
The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. The Central Bank has no statutory role in the setting of interest rates by financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997. The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. This interest rate is determined taking into account 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. However, as part of the Central Bank's work on mortgage arrears, lenders were asked to consider all avenues to help customers in arrears, including interest rate reductions.
