Sandra McLellan (Cork East, Sinn Fein) | Oireachtas source

I welcome the opportunity to contribute to this debate. My colleague, Deputy Pearse Doherty's purpose in bringing this Bill to the House is to tackle the unsustainable levels of variable interest rates being levied by banks on home owners. Under new legislative proposals by our party, the Central Bank would have temporary powers to impose a maximum cap on variable mortgage interest rates.

As my colleagues have previously outlined, Irish home owners are paying over the odds for these interest rates compared to other EU countries. This Bill is an effort to counteract the wholly ineffective response by the Government to fight the corner of home owners in any credible way. Some four long and painful years have passed since the issue was first raised. We were told by the Labour Party that we should be in no doubt that this Government would "act decisively, forcefully and effectively with the banks".

The continued penance being paid by taxpayers through mortgage rates, however, is nothing new. Rates currently being suffered by home owners in this State are among the highest in Europe. The standard variable rates here are almost double what they are across Europe. The measures proposed in this Bill would allow the Central Bank to set a maximum rate of mortgage interest for an individual bank for a period not exceeding 12 months.

The Bill is limited to the covered institutions quite simply because these are the banks which the people bailed out. They are partly owned by the people as a result.

This should, therefore, provide the Government with a mandate to act on the people's behalf. Under the proposed legislation, the Central Bank would have new powers to set out the maximum rate of interest which any of the five covered financial institutions could charge. Any bank affected by such an order could apply for a review after six months. This would cover eventualities such as a rise in the cost of money on wholesale currency markets.

Such rules and measures are in place for credit unions which cannot lend at a rate above 12.5%, as well as for moneylenders who are subject to individual maximum rates. Why not apply the same to the banks which were bailed out by the people of this State? Why not shift the power balance in a way that serves the people? It is about making a choice that will serve and protect families rather than banks. There needs to be a change from the fearful hands-off attitude to one that is on the side of the mortgage holder.

This Government's failure on mortgage arrears, on bankers' pay and in making the banks co-operate on insolvency cases is long documented. Its approach is always to put the banks’ interests first and the taxpayers' last. The banks in turn make gains and new demands. Recent research from the Central Bank itself evidenced that home owners are being ripped off to the benefit of the banks in that Irish standard variable rates are far beyond the European Union average at 4.24% compared with an EU median mortgage rate of 2.8%.

The banking sector is still broken and continues to sap the life out of citizens. There should be no illusion that the banking sector has changed in any significant way. The sector remains the largest drain on the economy. It cannot continue. It is unethical and unjust. Banks must be forced to play ball in creating a fair recovery rather than profiting from the lack of it. The Government needs to step up to the plate. It is incomprehensible that the State would not use its influence with those banks it owns to make it possible to bring rates down. It makes sense at this point of our economic development to act in the people's interest. It is not good enough for some banks to indicate they will reduce rates by the bare minimum.

We are calling on the Government and all other parties to support this Bill.

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