John Lahart (Dublin South West, Fianna Fail) | Oireachtas source

I want to commend my colleague, Deputy Michael McGrath, for bringing this forward. He was, as my colleagues have said, associated with bringing exactly the same Bill before the Dáil almost a year ago.

All that this Bill requires is for the Central Bank to carry out an assessment of the variable mortgage rate market. As some of the previous speakers have said, a mortgage is the single biggest financial outgoing for families, couples and individuals and the fact is that tens of thousands of variable mortgage customers are paying exorbitant rates. Those points have been made.

My colleague, Deputy McGrath, also pointed out some of the quick-fix solutions or some of the solutions being proposed by some of the mortgage lenders are not adequate, such as reducing fixed rates. This is simply not adequate as a response to variable rate mortgage customers as it might not be suitable for a large number of customers. The legislation that Deputy McGrath and my party is proposing this evening is comprehensive and would apply to all entities providing, managing or administering mortgages. This is very important as it would include those mortgages which have also been sold to vulture funds, and I know Deputy McGrath made this point. It is needed because more than 300,000 households are on standard variable rate mortgages. As a mortgage holder who benefits from a tracker rate, I can see the huge benefit that those who are on trackers have secured over the last five or six years with the tracker rate matching the ECB rate, and it runs to thousands annually, depending, obviously, on the size of the mortgage.

Deputy McGrath - I support him on this - has outlined how the legislation proposed by Fianna Fáil will deal with this issue comprehensively. The legislation we are proposing is balanced between the obvious needs for banks to be profitable - some of them clearly are, including AIB, which has reduced its variable mortgage rate and is still managing to make profits - and the rights of consumers to be treated fairly. The Central Bank would be given responsibility for monitoring the level of competition in the mortgage market and the fairness of rates charged. What we are proposing would also offer increased protection for mortgage holders whose loans are sold to vulture funds. At the moment those mortgage holders have absolutely no security or protection if their mortgage is sold onto a vulture fund and an increased variable rate is charged.

A Central Bank report in 2012 noted that high variable rates lead to higher arrears, which I am sure is something the Minister does not want to encourage or stand over. I note in the Fine Gael manifesto and in the programme for Government that the Minister is an advocate and supporter of the idea of switching mortgages. However, I want to support what Deputy Calleary said.

Maybe we all in this House can look at some legislation some time. If I wanted to move my bank account from one bank to another, the amount of loopholes, paperwork and bureaucracy that would face me is overwhelming. The idea of switching a mortgage from one lender to another may seem appealing. No matter how much a government may do in trying to encourage borrowers and setting up a code of conduct to facilitate them, and I applaud the Minister for that, it is not as easy as the Minister makes out or as is made out in the manifesto.

Deputy Michael McGrath has been in the vanguard of this issue for well over a year. This clear commitment regarding variable rate mortgage holders was one of the commitments in my party's manifesto towards a fairer Ireland, in which we referred to tackling mortgage arrears and tackling variable mortgage rates. One way of doing that is doing all we can to reduce variable mortgage interest rates.

There was no mention in the Fine Gael manifesto of the reduction of variable mortgage rates. As I stated, the Minister spoke about establishing a code of conduct for switching mortgages. The programme for Government states, "It is not ethically acceptable for Irish banks to charge excessive interest rates on standard variable rate customers." It goes on to state, "We will take all necessary action to tackle high variable interest rates", and talks about the code of conduct. The line, "We will take all necessary action to tackle high variable interest rates", is the one to which I want to draw the Minister's attention. My colleague, Deputy Michael McGrath, is offering this House an opportunity to do just that and it would be a shame to pass up that opportunity, particularly when the Minister has made that commitment in the programme for Government.

See this speech in context