Eamon Scanlon (Sligo-Leitrim, Fianna Fail) | Oireachtas source

I am delighted to have this opportunity to speak on this Bill. The Central Bank has consistently failed to do anything about exorbitant interest rates. The issue affects at least 300,00 mortgage holders on variable rates and these families have benefitted least from the current low interest rate environment in Europe. Collectively, as my colleague said, they owe €40 billion. A 1% cut in mortgage rates would give an average boost of more than €1,300 per annum to these families.

Since Fianna Fáil put standard variable rate mortgages on the agenda in March 2015, the banks have sought to swindle customers with minor changes to rates, most recently with a number of banks announcing a reduction in fixed rates, but reducing fixed rates is simply not good enough for the vast majority of customers. Banks are engaged in a policy of making certain offers available only to new customers. For example, Bank of Ireland will not allow an existing customer to fix his or her rate for a period of less than two years. This leaves customers in a position where they most likely will not benefit future rate reductions or lower rates. An existing Permanent TSB customer wishing to fix his or her mortgage for two years would pay 7.25% or 8.75% for a five-year fixed rate. By contrast, a new customer can fix his or her rate for between 3.7% and 4% for two years or 3.95% for five years. This legislation would require banks to treat new and existing customers equally. It is very important that should happen. Until recently, the Cental Bank was producing figures on mortgage rates that understated the extent of the rip off.

With each passing month families are paying sky high interest rates. While the announcement earlier this month of a reduction by AIB to 3.4% for both new and existing customers is welcome, other banks were less forthcoming. The main focus of their response has been to change their fixed rate offering, which we know provides no comfort for most customers. AIB's latest rate reduction will benefit approximately 76,000 mortgage holders and would result in an annual saving of €320 for owner occupiers with a €200,000 mortgage over 25 years.

Variable rates here are twice what they are across the eurozone. The Central Bank has consistently put the interests the banks ahead of those of customers on the variable rate issue. High variable mortgage rates are evidence that the banks regard variable rate customers as easy prey to make up for losses suffered. We all know about the suffering of the people of this country when the Government of the day had to invest billions of euro in the banks.

Who was paying it? The answer is the hard-working, decent, honest-to-goodness people who had to pay, through their taxes, to support the banks. It is time for a little bit of help from the banks for the people who are desperately trying to hang on to their homes.

The 2012 Central Bank report concluded that a risk with higher variable rates is that they may be counterproductive and continue to exert upward pressure on arrears. There are 92,000 family home mortgages in arrears and 50,000 of them are more than a year behind in repayments, with accumulated arrears amounting to €2.3 billion. While the number of households in short-term arrears has fallen, the trend in long-term arrears has been steadily worsening. That is because of the restrictions of the banks and their enforcement of penalties on people who have difficulty paying. They are the ordinary decent people of this country who are struggling to hang onto their houses but who, despite their best efforts, are falling into arrears. As a result, extra charges and penalties are being imposed on them. The Bill will provide for sustainable solutions to these mortgage arrears for those facing repossession as a result of high variable interest rates.

The Minister argues that the Bill is unconstitutional, but this case was not made when it was previously voted down in the Dáil. The legislation Fianna Fáil proposes is balanced and in the best interests of the general public. The Central Bank would be given responsibility for monitoring the level of competition in the mortgage market and the fairness of the rates charged. For example, in respect of those mortgage holders whose loans are sold to vulture funds, there would be a system of sanctions for banks which fail to comply with a direction order from the Central Bank. The Minister for Finance met the banks last summer to address the need for a reduction in standard variable rates and the deadline has long since passed for overcharging lenders to reduce those rates. This is why a legislative framework is needed.

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