Dáil Éireann Debate, Tuesday - 30 June 2015
246. Deputy Anne Ferris asked the Minister for Finance in view of the ongoing financial pressure on variable rate mortgage holders, if he will outline the consequences for Bank of Ireland if it refuses to reduce its interest rate for variable rate mortgage holders after 1 July 2015 deadline; the progress made with other banks in this regard; and if he will make a statement on the matter. [26034/15]
View answer266. Deputy Clare Daly asked the Minister for Finance the reason, in spite of his statements that all banks would announce measures by the end of June 2015 indicating the way they would allow customers to avail of lower rates, Permanent TSB has refused to announce any measures; and the action he will take to alleviate the pressure that its customers have been placed under. [26353/15]
View answerI propose to take Questions Nos. 246 and 266 together.
As the Deputy will be aware, I met with senior management of Ireland's six main mortgage lenders, including Permanent TSB, on 19th and 21st May to discuss the issue of mortgage interest rates. The meetings focused on the mortgage market and specifically the comparatively high standard variable rates currently being charged by the banks.
I outlined my view that Standard Variable Rates being charged in the Irish market are too high. There was agreement from all lenders that customers should have access to more competitive mortgage products as per my recommendation.
The banks agreed to review their rates and products and, by the beginning of July, to have simple options to reduce monthly mortgage payments for SVR customers. Some of the potential products include lower standard variable rates for existing and new customers, competitive fixed rate products and lower variable rates taking account of loan to value for new and existing customers.
In addition to the issue of rates I also outlined the need for greater competition in the market and the need for a more active and well-resourced campaign by the individual banks. This should focus on promoting awareness of their best offering and how easy it is for customers to take up new products and switch between different institutions if they wish to avail of better rates.
In relation to switching, I understand that the Competition and Consumer Protection Commission is planning to provide more information to consumers to encourage switching. I expect that if financial institutions are convinced that there is a threat that they will lose these customers, they will reduce the rates that they currently charge existing customers. The CCPC website www.consumerhelp.ie is a valuable source of information on the rates charged by various financial institutions.
The Government made a commitment in the Statement of Government priorities 2014 to 2016 to applying downward pressure on mortgage rates by increasing and supporting competition in the market and it will continue to work to fulfil that commitment.
As I have previously made clear, officials in my Department will review progress over the coming weeks and a follow up set of meetings with each of the six banks will take place in September in advance of the Budget.
