asked the Minister for Industry and Commerce if he is aware that the Irish Permanent Building Society has notified borrowers who received loans from the Society that the interest rate will be increased from six per cent. to seven per cent.; if he is aware of the serious concern of many borrowers at this decision; and if he is satisfied that the Building Society is justified in this action.
Ceisteanna—Questions. Oral Answers. - Increased Interest Charges by Building Society.
26.
I have no power to regulate the rate of interest charged by the building societies. The rules of the building societies registered under the Building Societies Act permit the Directors to determine the rate of interest which may be charged on mortgages from time to time. I understand that some of the societies have embodied a provision in contracts for loans on house purchase which enables the societies to increase the rate of interest chargeable on advances to existing borrowers.
Does the Minister think it fair or equitable at a time when interest rates tend to fall that the interest rate in this case should be raised from 6% to 7%?
I cannot comment on whether these matters are fair or not but building societies have to maintain their investments in competition with other credit institutions and I take it that in order to do so they fix whatever rates of interest they regard as fair and as rates at which they can compete with other credit institutions.
In present circumstances does it not appear somewhat strange that when interest rates are falling a society such as this should raise interest rates to the rather exorbitant level of 7%?
As I have told the Deputy I have no power to control rates of interest. These are fixed by contract between the building society and its clients.