asked the Minister for Finance if he is aware that banks in this country are charging over 13 per cent on bridging loans for housing; and if he intends to take any action in the matter.
Ceisteanna—Questions. Oral Answers. - Bank Loan Interest Rates.
45.
I am not so aware.
The level of interest rates is a matter primarily for the Central Bank. The rate of interest on accommodation extended by the associated banks is related to the status of the borrower and the purpose and duration of the loan. I understand from the Central Bank that on this basis it would seem that bridging loans to personal borrowers should attract the interest rate applicable to overdrafts, at present 12½ per cent. A higher rate should apply only where a loan is outstanding beyond the period normally allowable for bridging loans.
I am surprised that the Minister is not aware that this is the position. I am sure the Minister for Local Government could inform him of this and that in fact not only is the rate 13 per cent but the banks will not give bridging loans for periods longer than three months and that if the loans go over three months some people are being charged 15 per cent interest. The Minister should take action in this matter.
I think there must be some question about the status of the Deputy's friends because people who are in good standing and people who obtain normal bridging loans will get that accommodation at 12½ per cent.
I think that is a very light remark on the part of the Minister, particularly as young people are being asked to pay 15 per cent while waiting for their loans to come through.
They are not friends of the Minister.
Obviously they will not be friends of the Minister if he maintains that attitude.
Having regard to the fact that rates of interest which were building up last year are now being reduced in respect of building loans, the situation to which the Deputy refers is being considerably alleviated at the moment.