Holly Cairns
Question:235. Deputy Holly Cairns asked the Minister for Finance the steps he is taking in response to a recent increase in interest rates for people with mortgages on their family homes. [32527/23]
View answerTuesday, 4 July 2023
Questions (235)
Written answers
The formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB) and, as the Deputy is aware, the ECB has increased official interest rates over the past year as it attempts to combat inflation.
While the level of official interest rates influences the overall level of interest rates throughout the economy, the setting of retail lending rates by individual lenders is a commercial matter for that lender and I have no function or role in such decision making matters by financial institutions. However, a number of measures are in place to support households facing rising interest rates and the cost of living more generally. From a regulatory perspective, the Central Bank has introduced a number of increased protections for variable rate mortgage holders which can which help mortgage holders identify lower cost mortgage options.
Firstly, it made changes to the Consumer Protection Code to require mortgage creditors to explain to borrowers how their non-tracker variable interest rates have been set and to clearly identify the factors which may result in changes to variable interest rates.
Secondly, it also increased the level of information lenders are required to provide their customers including where there is a possibility for the borrower to move to a lower ‘loan to value’ interest rate band and to signpost the borrower to the Competition and Consumer Protection Commission's mortgage switching tool.More recently, the Central Bank wrote to all regulated firms last November to set out its expectations on how regulated firms should support their customers at this difficult time. The Central Bank is continuing to work with all regulated firms to ensure that borrowers facing financial difficulties are supported with alternative repayment arrangements where appropriate and, for borrowers who should be able to switch mortgage product or provider, are supported should they wish to do so.
With respect to mortgages, the Central Bank is especially focused on ensuring that firms have the resources and arrangements in place to assess applications from new or switching borrowers in a manner that is timely and based on prudent lending standards applied consistently across all mortgage applicants.It should also be noted that the Government has responded swiftly and decisively to help to offset the most severe impacts of inflation, with a particular focus on protecting the most vulnerable. Overall, €12 billion in direct relief has been provided to counter the effects of inflation and to support households more generally, with the policy response designed to avoid generating second round effects that could lead to an inflationary spiral.
This fiscal support has helped many households, including mortgaged households, with the increased costs of living.