Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The committee had a lengthy exchange with Mr. Sibley and Mr. Bernard Sheridan a couple of weeks ago on the variable rate mortgage issue and Senator Conway-Walsh has raised it with the Governor today. What are the Governor's views on the question of whether mortgage pricing in Ireland today is fair, reasonable and appropriate given all the factors that feed into the setting of an interest rate such as the cost of funds, the cost of capital, risk of default and so on? My own assessment is that the rates being charged remain unjustifiable. The environment for banks has been incredibly benign over the past number of years but it will not remain so indefinitely. Variable rates in particular should move in line with market conditions and while they have moved somewhat and there has been progress, there has not been enough of it. There are still glaring anomalies where certain banks are treating new customers far better than they treat their existing customer base. The Governor spoke of the risk of default and in enforcing security in Ireland but even low loan-to-value loans are way out of line with rates elsewhere in Europe. Legislation is coming and the banks have brought it on themselves. We will take on board the feedback we got a couple of weeks ago from the Governor's colleagues, as well as his own today. There may be changes on Committee and Report Stages to the functions we give to the Central Bank but powers are coming, which the banks have brought on themselves by legally overcharging their customers. What is the Governor's view as head of the Central Bank?