Dáil Éireann Debate, Tuesday - 5 March 2019
135. Deputy Michael McGrath asked the Minister for Finance if there are guidelines in relation to the way in which banks treat mortgage applicants who receive their principal employment income in a non-Euro currency such as sterling; and if he will make a statement on the matter. [10218/19]
Amharc ar fhreagraThe European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (which transpose the 2014 Mortgage Credit Directive into Irish law) sets out, in respect of the credit agreements which fall within the scope of the Regulations, certain particular requirements in relation to "foreign currency loans".
The Regulations define a “foreign currency loan” as a credit agreement where the credit is:
(a) denominated in a currency other than that in which the consumer receives the income or holds the assets from which the credit is to be repaid, or
(b) denominated in a currency other than that of the EEA Member State in which the consumer is resident.
As required by the Directive, the transposing Regulations provide that, where a credit agreement relates to a "foreign currency loan", a creditor must ensure that:
- the consumer has a right to convert the credit agreement into an alternative currency (if conditions specified by the creditor are met); or
- there are other arrangements in place to limit the exchange rate risk to which the consumer is exposed under the credit agreement (such other arrangements include a limit on the amount that the consumer has to pay under the credit agreement, or a risk warning where such a warning would be sufficient to limit the exchange rate risk to which the consumer is exposed).
Where the consumer has a right to convert the credit agreement into an alternative currency, such an alternative currency will be either the currency in which the consumer primarily receives income (or holds assets from which the credit is to be repaid), or the currency of the EEA Member State in which the consumer either was resident at the time the credit agreement was concluded or is currently resident. (The exchange rate at which the conversion will be carried out shall be the market exchange rate applicable on the day of application for conversion, unless otherwise specified in the credit agreement).
The Regulations also requires creditors to provide relevant information and warnings to the consumer at the commencement of the agreement (by way of the European Standardised Information Sheet) and regularly during the course of the agreement (at a minimum where the value of outstanding credit amount payable or the regular instalments varies by more than 20 per cent).
In addition, the other more general requirements of the Mortgage Credit Directive, including those which oblige lenders to obtain relevant information and to conduct a credit worthiness assessment prior to granting credit, will also apply where appropriate to "foreign currency loans".
While the Regulations (and indeed other applicable legislative and regulatory requirement) provides a framework within which creditors must operate when providing "foreign currency loans" and indeed mortgages more generally, it remains the case that the decision on whether or not to provide "foreign currency loans" (or indeed any other type of credit) remains a commercial and business decision for individual lenders.
