Peter Mathews
Ceist:183 Deputy Peter Mathews asked the Minister for Finance his plans regarding an increase to interest rates on standard variable mortgages; and if he will make a statement on the matter. [23988/12]
Amharc ar fhreagraTuesday, 15 May 2012
Ceisteanna (105, 106)
Freagraí scríofa
The lending institutions in Ireland, including those in which the State has a significant shareholding, are independent commercial entities.
Ultimately the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and board of each lending institution, having due regard to their customers and the impact on profitability, particularly where the cost of funding to each lending institution, including deposit pricing, is under pressure.
Neither the Central Bank nor I have any responsibility for any variation in the variable mortgage interest rates charged by Financial Institutions. However, as I have indicated in replies to previous Parliamentary questions on this subject, the Central Bank has advised me that it will continue to engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds.
Peter Mathews
Ceist:184 Deputy Peter Mathews asked the Minister for Finance his plans to advise Irish Life and Permanent to decrease its interest rate on standard variable mortgages in view of the fact that AIB was directed not to increase its interest rate on standard variable mortgages. [23989/12]
Amharc ar fhreagraAs has been stated previously, I have no role in the day-to-day commercial and operational decisions, which include these matters. Ultimately, the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and board of IL&P, having due regard to their customers and the impact on profitability.
Notwithstanding the fact that the State is a significant shareholder in IL&P, I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. Relationship Frameworks have now been agreed that clearly define the nature of the relationship between me and each of the covered institutions. Those Frameworks were published on 30 March 2012 and can be found at: http://banking.finance.gov.ie/presentations-and-latest-documents/.
It should be noted however that PTSB recently announced a 0.5pc reduction in its standard variable rate effective from yesterday and it now stands at 4.69% bringing the rate more in line with those charged by other institutions in the Irish mortgage market.