Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The Deputy refers to November 2011, which was when the Taoiseach wrote to the Central Bank to ask if it was seeking regulatory powers to control interest rates. The Deputy Governor replied to the effect that the Central Bank was not seeking such powers and provided good and sufficient reasons for not doing so. The difference between the situation in November 2011 and now is that at that time, there was a high reliance by commercial banks on ELG funding from the Central Bank. The commercial banks are not dependent on ELG funds any longer and must be cognisant of the deposit base on the one hand and the cost of funding in general. We must protect the generality of Irish taxpayers who own two of the banks almost completely. The business we are in is always about choices. Why would 2.1 million taxpayers be penalised to protect a smaller group of people who have loans from the banks?

It is not true to say that interest rates have not been passed on in respect of mortgages. Of all Irish mortgages, 50% are trackers and those have seen reductions in the rate of interest applying. However, people with variable mortgage rates have experienced some increases in the last 12 months, particularly where they have loans with AIB, which is bringing its interest rates up to average that prevails in the market. The bank must go to the market to raise funds on deposits as well as to meet the cost of funding. I note that the rates being charged by the Irish banks are comparable to the rates being charged elsewhere in Europe.

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