Having regard to the particular risks associated with foreign currency loans, the Mortgage Credit Directive, which is transposed into Irish law by the European Union (Consumer Mortgage Credit Agreements) Regulations 2016, provides for some particular consumer protection measures in respect of such lending. (For the purpose of the Directive and transposing Regulations a foreign currency loan is a mortgage where the credit is denominated in a currency other than that in which the consumer receives the income or holds the asset from which the credit is to be repaid, or is in a currency other than that of the EEA Member State in which the consumer is resident). The Regulations apply to any relevant credit agreement entered into from 21 March 2016 and, in respect of a foreign currency loans, it requires that mortgage lenders must at least ensure that they either (i) provide to the consumer borrower a right (if conditions specified by the creditor are met) to convert the loan into an alternative currency or (ii) there are other arrangements in place (such as risk warnings or limits on the amount the consumer has to pay under the agreement) to limit the exchange rate risk to which the consumer is exposed under the foreign currency credit agreement.
While the transposing Regulations provide a legal framework within which creditors must operate, including such matters related to exchange rate risk, the extension of credit in a foreign currency by creditors to consumer borrowers is not precluded by the Regulations and is a commercial decision of the individual lender (including also in relation to the particular commercial terms upon which the lender proposes to offer the foreign currency loan). As Minister I would not have a role in such commercial decision making by individual lenders and neither do the Central Bank’s housing loan mortgage lending measures (as put in place for macro prudential financial stability purposes) or Consumer Protection Code specify any particular requirements in relation to foreign currency mortgages and/or foreign currency earnings.