James Bannon (Longford-Westmeath, Fine Gael) | Oireachtas source

Deputy Dowds will be glad to know that I got considerable funding under the Government through the ghost estates initiative to have Drumlish and many other estates throughout Longford and Westmeath finished to a very high standard. We were successful in getting more funding for estates in Longford-Westmeath than any other county or region in the country. The people of Drumlish and the other villages that have benefited from funding from this Government are very proud of their area, as are all Longfordians and Westmeath people.

For quite some time it has become very clear that we need to encourage strong competition for new entrants in the banking sector in order to place some downward pressure on interest rates for variable rate mortgage customers. Indeed, in February 2015, figures published by the Central Bank showed that the average variable rate for Irish mortgage holders was 4.26%. When we look towards our eurozone neighbours, we see that the average variable mortgage rate is 2.47%. We can all agree that Irish home buyers are forced to pay disproportionate amounts compared to our European counterparts.

There is not one Member of this House who does not understand how serious the issue of obtaining a mortgage has become for families. Every day, I am inundated with phone calls from constituents asking for advice or recourse when they have been unable to obtain a mortgage. Before I came into the Chamber, I was speaking to a person who was working with the same company for nearly five years, earning over €41,500 per annum plus an annual bonus of approximately €2,000 per annum, and who was paying €500 per month rent for a property that has been put up for sale for approximately €90,000.

When he applied for a loan of €75,000 from the Bank of Ireland and EBS, he was refused by both. He then sought a loan from the local authority and was told his income was too high. This type of situation baffles me. Who is looking after the affairs of people in this situation? The vast majority of these people are on sustainable incomes and it beggars belief that they are being refused loans. The reason they are being refused is that there is little or no competition in this sector. A person who is refused a mortgage has few valid alternatives. As a result of this lack of competition, potential home buyers are being forced into the already crowded rental market, which is not a friendly environment for any young couple hoping to start a family. It has zero long-term certainty and landlords can charge extortionate amounts of rent. This is all due to a severe lack of competition among mortgage lenders. That said, I am pleased that the Consumer Protection (Regulation of Credit Servicing Firms) Bill will ensure that all mortgage holders in the State will have the protection of the code of conduct on mortgage arrears and access to the office of the Financial Services Ombudsman.

The Minister for Finance has been quite vocal on this issue for a long time now and his recent meetings with the six main mortgage lenders have resulted in all lenders agreeing that customers should have much greater access to more competitive mortgage options. While the banks have agreed to review their rates, we must ensure they lower the standard variable rates for existing and new customers. It is only when this has been achieved that customers will get real value for money. I firmly believe that the six major lenders need to launch a strong promotional campaign to raise awareness of their best offers and how easy it is for customers to switch between lenders if they so wish. I hope all of the above steps will have been taken by the time officials from the Department of Finance meet with each of the six lenders in September to review the progress made.

This Government has already taken a number of steps to promote competition in the banking sector, including the establishment of the Strategic Banking Corporation of Ireland, the credit

guarantee scheme and the amendment of section 149 of the Consumer Credit Act, to name but a few. I want to see this type of reform continue. We now have an excellent opportunity to push for a substantial reduction in variable rates. In my opinion, this is an opportunity that we simply cannot miss out on.

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