Dáil Éireann Debate, Wednesday - 21 September 2011
24 Deputy Jerry Buttimer asked the Minister for Finance if provision has been made for the large number of interest only loans and mortgages, many of which were taken on the assumption that it would be possible to sell properties at a profit within a few years, which are likely to mature over the next number of years and thereafter oblige borrowers to repay capital and interest; and if he will make a statement on the matter. [25281/11]
Amharc ar fhreagraAs Minister for Finance, I have no statutory role in the setting of the interest rates charged or paid by financial institutions that are regulated by the Central Bank. The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. Each institution determines the rate it charges its customers, depending on a number of factors, such as cost of funds and commercial considerations, competition in the market, risk pricing and the impact on deposit rates. In the case of a customer experiencing financial difficulties in meeting his/her mortgage commitments or one who is concerned that he or she is in danger of getting into financial difficulties, mortgage lenders must comply with the requirements of the Central Bank's revised Code of Conduct on Mortgage Arrears which came into effect on 1 January 2011. The code applies to the mortgage loan of a borrower which is secured by his or her primary residence. Primary residence means a property which is the residential property which the borrower occupies as his or her primary residence in the State, or a residential property in the State which is the only residential property owned by the borrower. Under the code of conduct, a lender must have a mortgage arrears resolution process in place incorporating communication with borrowers, financial information, assessment, resolution and appeals. In exploring all options for alternative repayment arrangements lenders must consider, inter alia, deferred payment, term extension, interest and partial capital payments and interest only arrangements.
