Finian McGrath (Dublin North Central, Independent) | Oireachtas source

I thank the Acting Chairman for the opportunity to speak to this important and urgent debate on variable rate mortgage holders in Ireland. I commend Deputy Michael McGrath for tabling this motion which deals with the issue head-on. We have to focus on the issue for the 320,000 variable rate mortgage holders as they are the forgotten customers and need and deserve fairness. They also deserve assistance at this very difficult time.

Not only does the motion highlight the issue, it also puts forward sensible solutions to the crisis. We often hear speakers in the House ask about solutions. This motion puts forward solutions. We have a duty to support them strongly. The current situation is that the standard variable rate for residential mortgages charged by State-owned Permanent TSB, AIB and EBS, as well as other banks operating in the market, is up to 2% higher than the comparable mortgage rates in other eurozone counties. For a typical €200,000 mortgage, a standard variable rate customer will pay approximately €6,000 a year more in interest than a borrower with a tracker mortgage. Banks which operate in the Republic and the North are, on average, charging customers in the Republic 2% more for standard variable rate mortgages. Normal competitive forces which would allow customers with high mortgage costs to switch to an alternative provider are not present in the marketplace, effectively trapping customers with high standard rate mortgages.

The Economic Management Council has not met the banks since 2012 and it is now 2015. The European Central Bank base interest rate is at an historic low of 0.05% and the cost of funds for the banks has fallen considerably in recent times. Recent mortgage interest rate reductions announced by certain banks have targeted new customers only and were not extended to the current standard variable rate customers. The EMC needs to meet representatives of the banks at the earliest opportunity and impress upon them the unfairness of the current pricing regime in respect of standard variable rate mortgages. We also need greater product innovation on the part of financial institutions in the mortgage market. An investigation should be undertaken into the level of competition in the Irish banking sector. I call on the Minister of State to ensure legislation in introduced to ensure all residential home loans in the State are subject to the protection of the code of conduct on mortgage arrears and have access to the Office of the Financial Services Ombudsman.

Residential mortgage holders whose loans have been sold to third parties should be protected from profiteering. The Minister for Finance should bring forward a White Paper on competition in the banking sector. The Central Bank, in its consumer protection role, should engage directly with the banks on the issue of high standard variable interest rates and the need for the fair treatment of existing standard variable customers as well as new mortgage customers. I urge all Deputies to support this motion and the 320,000 variable rate mortgage holders in Ireland.

See this speech in context