I call on Deputy Richard Boyd Barrett.
Mortgage Interest Rates Cap Bill 2023: First Stage
Deputy Paul Murphy is taking some of it. One and a half minutes.
I notice that there is not a very equal distribution of time among the Deputy's group.
It depends on what one is the lead spokesperson for, or what particular portfolio one has.
I move:
That leave be granted to introduce a Bill entitled an Act to direct the Central Bank to cap interest rates on private dwelling house mortgages at 3 per cent; and to provide for related matters.
Hundreds of thousands of mortgage holders in this country have been absolutely fleeced and crucified by mortgage interest hikes over the last year or so, with ten interest rate hikes by the European Central Bank, ECB. There are approximately 130,000 tracker mortgages in this country, all of which have been impacted by these enormous, relentless hikes by the ECB. There is approximately the same number of variable rate mortgage holders. To give one example, someone in my area who I know well, has had their interest repayments increased. This is a single working mother with one child, and her interest payments have increased by €6,500 in the last year. That would be about average for a 3% increase on an average mortgage of about €300,000.
How on earth are working people supposed to sustain that level of increase in their outgoings, around €6,500 or €7,000? If one is unlucky enough to have a vulture fund holding one's mortgage, they are charging rates of 6% to 8%, absolutely fleecing and crucifying people. Of course, while many people in Europe have seen the impact of these ECB rate hikes, in Ireland we have higher mortgage interest rates than anywhere else in Europe. They are significantly higher than the average in Europe. That then is reflected in the staggering profits being made by the credit and financial institutions and by the banks. The mortgage interest hike misery being suffered by hundreds of thousands of working people in this country is reflected in, for example, Bank of Ireland making €1 billion in profits in the first six months of this year, an increase of about 180% in profits. That is typical of the sort of hikes.
This cannot go on, and the Government cannot wash its hands of this and say there is nothing significant that can be done. The small bit of relief that was given in the budget is a drop in the ocean compared to the misery and loss that people are suffering. We are very simply proposing what a judge in one mortgage case actually did in a court, which was to limit the mortgage interest to 3%. We propose that a law should be introduced - and that is what this Bill does - where the Central Bank would be empowered to do precisely that, capping mortgage payments at 3%, so no more can be charged. If that also has the effect of driving all vulture funds out of the country, we would be delighted. Their mortgages should, in any event, be absorbed by the pillar banks, and those pillar banks should start to be run in the public interest and not simply for the profit of shareholders.
This Bill is an attempt to actually address the interest rate hike misery of hundreds of thousands of people and we hope the Government will support it.
Last month was the 24th month in a row that saw inflation of more than 5%. Basic human requirements such as food and energy continue to rise even higher, while wages, benefits and pensions have seen only meagre increases, which means that people are suffering real cuts in income, week by week and month by month. For those with mortgages, this is an extra burden. There have been over ten interest rate increases over the last year. Average mortgage interest payments have increased by over 50% in the year to August 2023. In real terms, that means hundreds of euro extra per month, and thousands of euro extra per year, which people simply cannot afford.
People should be clear in that on the other side of the balance sheet are the banks who are making extraordinary and record profits. They have tripled their profits in the first six months of this year compared to what they got in the first six months of 2022. AIB, Bank of Ireland and PTSB have made more than €2 billion. They have over €50 billion on deposit at high interest rates with the ECB, and then they are very happy to pass on the increase in interest rates to mortgages.
The Government has the power to do this. It acted previously to prevent absolutely extortionate rates on short-term loans. It would have the power under this Bill to stipulate a rate of no more than 3% and to stop the rip-off of mortgage holders.
Is the Bill opposed?
Question put and agreed to.
Since this is a Private Members' Bill, Second Stage must, under Standing Orders, be taken in Private Members' time.
I move: "That the Bill be taken in Private Members' time."
Question put and agreed to.