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

I would like to return to the Professor Lane's exchange with Deputy Doherty on the mortgage interest rates issue, about which we have had a number of discussions over a long period of time. We do not hear enough from the Central Bank or the Governor on that issue. When he was pushed, Professor Lane indicated there was scope for further reductions in the margins. In effect, he is signalling that he expects reductions to be of a modest variety. I have repeated the point a number of times about what I would regard as anomalies that the Central Bank is standing over. In the case of Permanent TSB, a bank with significant challenges, nobody is questioning that. It announced a cut in fixed rates for new customers but its existing customers will not benefit from those rate cuts, which is completely unfair. As the consumer protection watchdog, the Central Bank should say it is not acceptable.

Professor Lane has nothing really to say about the whole cashback incentive, which I regard as a gimmick in which a number of banks continue to engage to confuse and dazzle customers by giving them a few thousand euro to camouflage higher rates.

Professor Lane does not want any powers to deal with high interest rates. As Deputy Doherty said, the most recent retail interest rate statistics from July showed they averaged 3.21% on a new mortgage in Ireland compared with 1.77% on average in the eurozone. We have the highest rates in the eurozone. The only other country with interest rates above 3% is Greece, so we are well and truly the highest. Professor Lane does not want any powers, however, even if they are to be non-discretionary powers or if it means putting methodology or a reference rate into legislation, which a number of countries have done, as he well knows. He does not want to have that stick in place, even as a threat.

While we have the issue of trackers in Ireland and a significant portion of loans on the book are on a tracker rate, these mortgages are no longer loss-making. Let us be honest, tracker mortgages are profitable for banks today. Ulster Bank came out with a two-year fixed rate of 2.3% in June, albeit only for two years, which I thought was a game-changer. It was a significant cut below the rates offered by anybody else, and I thought the others would have to respond. Four months on, however, there has been no real response from the other lenders. They all strike me as being comfortable with what they have and there is no real competitive dynamic in the market on actual rates. All we have are cashback and other dazzling offers of lump sums, the payment of legal fees and so on. While the Central Bank might regard its core priority as being prudential supervision and protecting the stability of the financial system, it is, for now at least, the consumer watchdog as well, but I do not hear it dealing with those issues of interest rates.