Pearse Doherty (Donegal, Sinn Fein)

This section extends the mortgage interest relief.

The Minister will be familiar with this. It is a proposal I put forward a number of years ago which has found its way into the tax code. It was put forward as a result of very high interest rates being charged at a time when interest rates were probably increasing at the European Central Bank. We have now seen that reverse, with interest rate reductions in the last period. The interest rate has stayed stable over the last three ECB meetings but there has been a gradual decrease in the ECB rate, which has stood at 2% since June. The problem is that very high interest rates are still being charged by traditional banks and lending non-banks across the State. Nearly 30% of all mortgage holders with traditional banks are paying over 4% at this time and 30% are paying over 5% with the lending non-banks. A substantial number of people are actually paying above that if they are in the lending non-bank space.

The average interest rate across the eurozone in September was 3.3%. All these percentage points are big money for the average mortgage. A quarter of a percent could amount to a couple of hundred euro per month, which is a couple of thousand euro per year that should be in the householder's pocket as opposed to the pockets of the banks. The traditional banks in the State have made huge profits, totalling €5 billion between them last year. When we have a eurozone average interest rate of 3.3% and over one in four people here paying over 4%, there is an issue. I have made the point that the Government needs to stand up to the banks a bit more. Banks used to be called in and were told what was expected of them. Obviously, we cannot dictate or direct the policy – the Minister has ensured the shareholding of the State has been sold on, with PTSB to be the next to be sold – but there is a really big issue here. Certain customers are being ripped off. There are no two ways of describing that. If these banks were not making bumper profits, we would say customers were not being ripped off and this was just the market and businesses have to be profitable. Of course, they have to be profitable but €5 billion profit combined is a lot of profit. When mortgages are being charged well above the European average, there is an issue.

We also have the issue of what I call mortgage prisoners. These are people whose loans have been sold to vulture funds with the support of the Government parties at the time. These people have really been screwed over. There are about 70,000 mortgage prisoners, of whom about 10,000 are paying over 6.5% interest rate. That is extortionate in anybody’s books. When the ECB rate is 2% and average eurozone rates are 3.3%, a 6.5% interest rate for nearly 10,000 people as of June this year is pure and utter greed and extortion. It is licensed and allowed, which is ridiculous in my view.

This measure is necessary in this section because the banks are not passing on the interest rate reductions as would be expected. We know they did not increase them blow for blow as they went up. We do not expect them to reduce them blow for blow as they come down, but we do expect reductions and something more in line with the eurozone average. We definitely cannot stand over a situation where 10,000 families are being charged over 6.5% in interest on their mortgages. This measure is necessary but it should not be necessary because the banks should be doing their job and we should be in a more normal lending-rate environment in this State. Unfortunately, we are not. I am also concerned the relief will be phased out. Of course, it should be phased out because the banks should be reducing interest rates, but to make sure it can be phased out, we need to be able to stand up to the banking sector and ensure the banks are not making these bumper profits at the expense of mortgage holders.

In amendment No. 7 to this section, I am seeking a report on mortgage interest. The amendment has been ruled out of order at the direction of officials in the Minister’s Department. Is that the case?