Brian Walsh (Galway West, Independent) | Oireachtas source

I welcome the opportunity to contribute to the debate on this Bill proposed by Fianna Fáil concerning regulation of variable mortgage interest rates. The Bill envisages a role for the Central Bank in oversight and enforcement in the domestic mortgage market and in the relationship between borrowers and their lenders. There is some merit in the Bill but it is possibly premature given the strategy the Government has adopted.

It is a terrible pity that Deputy Michael McGrath was not in a senior position in the previous Government because he might have convinced his party to concern itself a bit more with regulation of such matters in the past. Fianna Fáil presided over an utterly unsustainable regime in which 100% mortgages were routinely handed out by banks, and that was the root of many of the difficulties that subsequently arose. It is difficult, therefore, to read this Bill without some sense of irony given that it has been proposed by a party whose guardianship of the economy in the recent past can be reasonably compared to a fox's guardianship of a henhouse.

As I said, I believe the Bill is premature and in some ways it is opportunistic. The Minister, Deputy Noonan, has mapped out and initiated moves to address comprehensively the issue of mortgage rates in the banking sector. To change course at this stage in the manner being suggested would not be the prudent route to pursue. The Opposition Members know that. They know that this Bill cannot possibly be supported by Government, but they propose it for the sake of headlines or a sound bite. It is symptomatic of a trend in Opposition politics in the Dáil where policies do not have to make any sense. They just have to sound good when reports of them fall on half-listening ears.

Sinn Féin, which opposes principles south of the Border while it implements them in the North, threatened to unleash a reign of economic terrorism on the country through its fairy tale type policies, and amnesia stricken Fianna Fáil beside it is struggling to feign indignation as this Government strives to fix everything they broke. While these and others scramble to outflank each other in the populism stakes, the Government is working to do something about the problems and rebuild our shattered economy on a lasting foundation of sustainable economic growth. The Minister, Deputy Noonan, met with the six main lenders earlier this year to discuss the mortgage market and the issue of high standard variable rates. The banks have agreed to review their rates by the beginning of this month to have options to reduce monthly mortgage payments for standard variable rate customers. I understand they have reverted with these proposals and they are currently being considered by the Minister and his Department. He will meet them again later this year ahead of the next budget, and it is at that point that the question of a penal banking levy or regulation of interest rates will be considered if sufficient progress has not been made.

Before coming into the Chamber, I listened to a report on RTE about a draft report by the European Commission, which stated that it is important to allow Irish banks sufficient leeway in setting mortgage interest rates. I would not entirely concur with that sentiment but there is a dilemma here for Ireland in the sense that many of the Irish banks, in which the taxpayer has a stake, are returning to profitability. It appears that we will not have to avail of the retrospective recapitalisation of banks now because the State will recover its interests in the main Irish banks through sale on the open market. There is a dilemma in that regard in terms of profitability and interest rates, but taxpayers have contributed hugely to sorting out the economy and recapitalising the banks. That is where there is merit in the Bill. Something has to happen. I do not know whether punitive penalties on banks if they do not deliver is the answer because that will impact on the overall value of the banks. It is an issue that must be handled very carefully but the Minister has adopted the right position, and I hope we will see significant progress on this later this year.

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