Brendan Griffin
Question:251. Deputy Brendan Griffin asked the Minister for Finance his views on a matter (details supplied); and if he will make a statement on the matter. [2718/15]
View answerTuesday, 20 January 2015
Questions (251)
Written answers
Firstly, I must confirm to the Deputy that I have no 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 mortgage interest rates charged, that is a commercial matter for each institution concerned. A Relationship Framework has been specified that defines the nature of the relationship between the Minister for Finance and the banks in which the State has a shareholding. These Frameworks were published on 30 March 2012 and can be found at: http://www.finance.gov.ie/what-we-do/banking-financial-services/shareholding-management-unit/shareholding-management-unit/.
The interest rates charged by lending institutions in Ireland are 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 mix.
I should also point out that while the cost of funds for Irish lending institutions has come down significantly in the past couple of years, it is still much higher than the ECB base rate. Finally, lending institutions in Ireland, including those in which the State has a significant shareholding, must ensure that the rate they lend at is economically sustainable and provides a return for that institution and ultimately the State, where it is a shareholder. Without a positive return on their lending, these institutions would not be capable of maintaining and growing their capital base and thus be in a position to support the economy.
The Deputy should also be aware that 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. However 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.