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

I thank the Deputy for his supplementary question. He will recall that the Central Bank report published last May, to which I referred, stated that there was an excessive margin being charged in Ireland on variable interest rates but it disagreed that the margin was as big as has been cited in debates here on several occasions. The banks have moved to lower that particular margin. AIB has had made three reductions and it is the biggest mortgage provider in the country. It is down to 3.65% and it does not vary between new mortgages and existing ones. Permanent TSB has moved from its variable standard rate to what it describes as a managed variable rate and has introduced the concept of loan to value.

In the best loan-to-value situations they are offering money at 3.6%, I believe, and then it varies with loan-to-value rates, so there is significant movement. There are dozens of interest rates being offered now in different circumstances and I wish to see how the market operates and if competition will kick in. There is a reluctance among people to change. There is a type of inertia which is leading to individuals staying with their existing mortgage holders, but there is much better value if people shop around. It is not something one must fix for life - one will not get that option anyway. Normally, one fixes for one, two or three years and people can then revert to standard variable rates. At the conclusion of my meetings with the banks I said that if we are all around, we will talk again early in the new year and we will see how competition is operating.

On the question of the levy, there has been a levy in place over the last number of budgets. It will be a matter for the budget, and whether the levy will be maintained as it is, increased or reduced is a matter for announcement on budget day.

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