Dáil Éireann Debate, Tuesday - 18 April 2023
425. Deputy Aodhán Ó Ríordáin asked the Minister for Finance if the Central Bank can direct a financial institution (details supplied) to increase interest rates on savings in line with increase rate increases on tracker mortgages. [18265/23]
View answer426. Deputy Aodhán Ó Ríordáin asked the Minister for Finance what, if any action he is considering to require financial institutions to increase interest rates paid on savings in line with the increases in mortgage interest rate increases associated with tracker mortgages; and if he will make a statement on the matter. [18266/23]
View answer427. Deputy Aodhán Ó Ríordáin asked the Minister for Finance the minimum notice period required to increase an interest rate on a tracker mortgage; and if it is correct protocol that a mortgage lender (details supplied) would give nine working days' notice of an interest rate increase in the same month. [18267/23]
View answerI propose to take Questions Nos. 425, 426 and 427 together.
The formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB). As the Deputy is aware, the ECB has increased official interest rates over recent months as it attempts to combat inflation. The level of official interest rates will influence the overall level of interest rates throughout the economy.
However, the determination and adjustment of retail and business lending rates and deposit rates are commercial decisions for individual lenders in line with the terms of the particular credit or savings contract and I have no function or role in such decision making matters by financial institutions.
Firms make their own commercial decisions based on many factors, including the costs of offering the loan or deposit products, the terms and conditions of their products and their commercial pricing strategy and funding costs. These are commercial decisions for individual banks and neither the Central Bank nor I have a role in prescribing or setting these interest rates.
The changes in the interest rate on a tracker mortgage are determined by any movement in the underlying rate being tracked (typically the interest rate set by the European Central Bank) and, in line with the terms and conditions of the mortgage contract, these changes are applied to tracker mortgages customers by their lenders. This approach applies to all tracker mortgage customers including those that have remained with the original lender and to borrowers whose tracker mortgages were purchased by another entity.
A regulated entity must notify affected personal consumers on paper or on another durable medium of any change in the interest rate on a loan.
In the case of a tracker interest rate, the regulated entity must provide the notification required as soon as possible, and no later than 10 business days after the regulated entity becomes aware of a change in the underlying rate being tracked.
