Seán Sherlock (Cork East, Labour)
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On Second Stage we assented to bring the Bill to this stage. One of the questions I have had on my mind for some time has been where the Central Bank is in respect of its position on mortgage pricing in Ireland. There was a report from 2015 but is there an updated report in that respect? I do not necessarily need the answer now. It seems there is a very clear position within the Central Bank on bank profitability. The report states that equity investors, whether the State or others, cannot be expected to inject capital if a return in the form of profits is not in prospect.

The report stated:

That is why it is unrealistic to imagine a regime even in the long-run in which mortgage lending rates do not build in not only a sufficient spread (over the cost of funds) to cover the credit risk being undertaken, but also make an adequate contribution to profits. It is likely, however, that the rates in effect for most banks at the end of April 2015 [which is when the report was published] were higher than would be necessary in the long-run for a bank unburdened by a poorly performing mortgage back book.

Could we get a perspective from the Central Bank as to whether this view point has been updated? It would be pertinent regarding dealing with the issues of competition as elucidated by the Minister.

There is an issue regarding how the property rights of some creditors would be affected. Can we have a deeper dive into the dynamic of the property rights as they affect those people who paid 6% or 7% on variable rates? In one case I am familiar with, it will add approximately €100,000 to the cost of the mortgage over its lifetime. I wonder how somebody like me could explain to the person that it is a constitutional issue in which the property rights of the bank or financial institution take precedence. It is a little unclear.