Dáil Éireann Debate, Thursday - 26 June 2014
60. Deputy Eoghan Murphy asked the Minister for Finance if he will provide assurances that he will not allow banks here to impose any further increase in variable rate mortgages while the ECB rate remains as low as it is; and if he will make a statement on the matter. [27629/14]
View answerFirstly, I must confirm to the Deputy that neither the Central Bank nor I have any responsibility for any variation in the variable mortgage interest rate charged by regulated financial institutions. 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.
