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Interest Rates

Dáil Éireann Debate, Thursday - 29 September 2016

Thursday, 29 September 2016

Ceisteanna (34)

Pearse Doherty

Ceist:

34. Deputy Pearse Doherty asked the Minister for Finance the status of his engagement with the State-backed banks and other banks to achieve a reduction in the standard variable rates for mortgages; and if he will make a statement on the matter. [27538/16]

Amharc ar fhreagra

Freagraí scríofa

The issue of standard variable mortgage rates is a significant one for this Government and it has made it clear that it is not acceptable for lenders to charge excessive rates on such mortgages. The Programme for a Partnership Government, therefore, has set out a range of measures which seek to provide for greater transparency and competition in the mortgage market. These actions include establishing a new code of conduct for switching mortgage provider, which will be administered by the Central Bank, and the development of a new, easy-to-use standardised and dedicated mortgage switching form.

In addition, the Government will request the Competition and Consumer Protection Commission to work with the Central Bank to set out the options for the Government in terms of market structure, legislation and regulation to lower the cost of secured mortgage lending and to improve the degree of competition and consumer protection.  Also the recent transposition of the Mortgage Credit Directive, which is intended to develop a more pan European mortgage market consistent with a high level of consumer protection, into Irish law should help contribute to this process over the medium term. The primary objective of this approach by Government, therefore, is to develop an overall banking policy that encourages more entrants and a vibrant banking sector with real competition in order to provide more choice to mortgage holders but without giving rise to potential negative consequences that could impact on the supply of residential mortgage credit.

I had a series of formal meetings with the main mortgage lenders last year where I outlined the Government's opinion that the standard variable rate being charged, to both existing and new Irish mortgage customers, was too high. The banks have since reviewed their rates and subsequently reduced them which has been evidenced in the latest Central Bank statistical release on retail interest rates for July 2016. Nevertheless, this is a policy area that the Government will keep under active review in our ongoing engagement with mortgage lenders and in implementing the Programme for Government.

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