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

As the Deputy is aware, I have no statutory role in mortgage interest rates charged by regulated financial institutions. It is a commercial matter for the banks concerned. The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. The general point raised by the Deputy is an important one and worthy of ongoing review by Government. The country does not have control of monetary policy; that responsibility rests with the European Central Bank.

Changes in interest rates over recent years have, by and large, been downward, reaching the current historic low levels, not just in the eurozone but also in the United Kingdom, the United States and elsewhere.

For some time the focus of interest rate policy has been aimed at providing a sustainable environment for economic recovery in the eurozone and beyond to take hold.  The current low rates have been beneficial for households in Ireland where the excesses of the previous decade have left a legacy of indebtedness without parallel in the history of the State.  The Deputy has no need to remind me of the significant fiscal adjustment required in recent years, much of which has been borne by households across the country.  Income reductions, increased taxes and new levies and charges have been necessary to restore order to the public finances.  The reduction in key ECB interest rates has served to moderate some of this burden, particularly for those holding tracker rate mortgages. Recent Central Bank analysis confirms that some households have been in the fortunate position to use this low interest rate environment to deleverage and pay down debts. Where other families have been faced by mortgage distress, a comprehensive framework to support these households through their difficulties has been introduced.  Reform of the insolvency legislation has been introduced to allow those unable to find a solution to their indebted circumstances the types of option expected in a modern, functioning economy.

Speculating on the magnitude and timing of future interest rates movements is a hazardous exercise and one in which I do not wish to engage.  My focus and that of the Government is on implementing the necessary policies to promote and foster economic growth.  Ultimately, a return to economic growth will underpin sustainable public finances, increase employment and improve incomes, thereby protecting households as interest rates inevitably rise at some future point. For now, however, as the president of the European Central Bank, Mr. Mario Draghi, confirmed at the ECB press conference last week, the key ECB interest rate remains unchanged at 0.25%.  According to the ECB, incoming information confirms that the moderate recovery of the euro area economy is proceeding in line with its previous assessment. However, the ECB also expects that there will be a prolonged period of low inflation. Against this background, the key ECB interest rates are expected by commentators to remain low for some time.  We will, of course, keep all of these matters under constant review and adjust policy as circumstances evolve.

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