Oireachtas Joint and Select Committees

Wednesday, 26 November 2014

Joint Oireachtas Committee on Finance, Public Expenditure and Reform

Overview of Banking Sector: Central Bank

2:20 pm

Photo of Kieran O'DonnellKieran O'Donnell (Limerick City, Fine Gael) | Oireachtas source

In the Governor's opening statement he said that the banks were constrained by their inability to restore spreads on trackers. The banks have sought all means to restore their profitability, including the widening of the standard variable rate spreads which typically apply to old as well as new business. Tracker mortgages are clearly proving very difficult for the banks to deal with in terms of their balance sheets and profitability. In the wider context, is it not incumbent upon the ECB to consider taking tracker mortgages off the balance sheets of the banks that are under pressure? That would improve the banks' balance sheets and could also positively impact on the variable rate mortgages they are offering. The banks would not then be putting these prohibitive rates in place. Given that Professor Honohan is on the board of the ECB, does he not agree that now is the time to put in place such a measure? Professor Honohan agrees that the banks are penalising the standard rate mortgage holders because of their problems with the tracker mortgages.

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