Dáil Éireann Debate, Wednesday - 18 January 2023
386. Deputy Pearse Doherty asked the Minister for Finance the average retail mortgage interest rate that is applied to non-performing mortgage loans and mortgage loans for which a tracker rate applies for the latest month for which information is available and June 2022 respectively; and if he will make a statement on the matter. [2404/23]
View answer387. Deputy Pearse Doherty asked the Minister for Finance if his attention has been drawn to the fact that non-bank entities and investment funds holding mortgage loans are refusing to engage with borrowers or provide or discuss alternative repayment arrangements; his views on the growing disparity between mortgage interest rates that are being applied by retail banks and these entities; if the Code of Conduct on Mortgage Arrears is being adequately adhered to by these entities; and if he will make a statement on the matter. [2406/23]
View answerI propose to take Questions Nos. 386 and 387 together.
The Central Bank has put in place a range of measures in order to protect consumers who take out or have a mortgage. This consumer protection framework seeks to ensure that lenders are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle, for example, through protections at the initial marketing/advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties.
This consumer protection framework includes the various Central Bank statutory Codes of Conduct such as the Consumer Protection Code 2012 (Code) and the Code of Conduct on Mortgage Arrears 2013 (CCMA) and all regulated entities, including retail credit firms and credit servicing firms, are required to comply with the provisions of these codes in their dealings with consumers.
The CCMA provides specific protections for borrowers in arrears or facing a prospect of arrears on a loan secured on a primary residence. In particular, a regulated entity must pro-actively encourage borrowers to engage with it about financial difficulties which may prevent the borrower from meeting his/her mortgage repayments. Also, where a borrower is experiencing repayment difficulty, a regulated entity must explore all of the options for alternative repayment arrangements (ARAs) offered by the entity to determine if a more suitable and sustainable repayment option is available based on the borrower’s individual circumstances.
If a borrower is not satisfied with the options proposed, or if the regulated entity declines to offer an ARA, an appeals mechanism is provided for in the CCMA. In addition, a regulated entity must review an ARA at intervals that are appropriate to the type and duration of the arrangement, including at least 30 calendar days in advance of an ARA coming to an end.
In relation to the mortgage interest rates charged by different categories of Central Bank regulated entity it is, subject to the terms of the particular contract, a commercial matter for individual mortgage creditors to set their own lending rates.
However, the Code, inter alia, requires that all regulated entities explain to borrowers how their variable interest rates have been set including in the event of an increase. Where a borrower is facing an increase in the rate of their mortgage, they can seek to move to another product at their existing lender or switch to a different lender, noting this will be subject to the lending criteria, terms and conditions of the lender to whom they apply.
In this respect, the Central Bank has advised that it has engaged with lenders to ensure the operational capacity is in place to facilitate people to switch at a system wide level.
In terms of interest rates on non-performing loans, I have been informed by the Central Bank that it does not produce formal interest rate statistics that distinguish performing from non-performing loans. In respect of tracker mortgage interest rates, the Central Bank indicates that in respect of credit institutions the interest rate on tracker mortgages secured on a primary dwelling house was 2.13% in September 2022 (1.15% in June 2022) and for buy to let mortgages it was 2.19% (1.08% in June 2022). The Central Bank advises that this data is published on a quarterly basis and the next set of this data, which will be for end December 2022, will be available in February.
The Central Bank also advises that the protection of mortgage loan borrowers, including those in arrears, is a key priority and that it will continue to supervise compliance by regulated entities with the CCMA and will investigate any issues that arise, including patterns of behaviour which suggest that the CCMA process is not being followed.
