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

As I outlined last week in the spring economic statement, the mortgage interest rates being charged by the banks in Ireland have not been reduced in line with the rate reductions by the ECB. I discussed the issue of mortgage interest rates with the Governor of the Central Bank on 2 April. As a result of this meeting, the Governor is currently reviewing the issue of the standard variable rates charged by the lenders. The Governor should be in a position to present this analysis to me in the coming days. I will then meet the six principal mortgage lenders in order to discuss this issue.

The lending institutions in Ireland, including those in which the State has a significant shareholding, are independent commercial entities. I, as Minister for Finance, have no statutory role in regard to regulated financial institutions setting interest rates. 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.

Equally, the Central Bank has no statutory role in the setting of interest rates by regulated entities, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act 1997 and the requirement to be notified of penalty or surcharge interest imposed in respect of arrears. However, if the Central Bank proposed to me that it should get control of the regulation of interest rates, I would legislate for that.

It should be noted that there have been moves on interest rates. As the Deputy will be aware, on 1 May AIB Group announced a number of reductions to its mortgage interest rates for owner-occupier and buy-to-let mortgages.

A series of reductions over a fixed timeframe would be acceptable to me, and in that context I welcome AIB's announcement as a good first step. Competition between the banks will be crucial in ensuring that the price that the customers have to pay moves in the right direction.

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