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

The figures I am about to present have been verified by Interest Rate Check Ireland. They relate to a man and his wife, who have five young children, who took out a mortgage in March 2009. It appears that no legal advice was given, as can be seen in the loan letter offer. The interest rate clause is also ambiguous. The APR was 7.8%, with the interest rate at 7.45%. The profit margin for the bank was 5.95% over the European Central Bank, ECB, rate at the inception of the loan. This profit margin rose to 6.76% over the ECB rate. We believe this to be exceptionally high and unjust. As can be seen in the report the bank was methodical in not applying payments as they fell due. Payments were applied one month after payment.

The bank offered a discount in 2012 and reduced the rate, but this was later reversed in 2014 when the bank increased their rates, again to an exceptionally high level. This had the result of charging the client interest of over €107,000 over an eight year period. The cost of credit for this period, if using the ECB repo rate as the basis of the funding, would have been €8,130.82. This means that the bank made a profit of €99,466.66 over this eight year period. Had the bank offered a reasonable interest rate, for example the ECB rate plus 1%, the account balance would have been €119,241.37. The interest total for this period would have been €20,917.98 had the bank acted thus. The account would then have been €86,679.50 less than what was actually borrowed - some €200,000. It appears that this was a very unfair contract.

The client has made payments of €101,736 to date, and the account balance now exceeds the original loan by over €5,000. We believe that the contract is so unfair that if the client had been offered legal advice and been told what the cost of this product was the advice would have been not to enter into this contract. This contract in effect means that after eight years the client would owe more than what was borrowed while having made repayments of over €107,000. On this basis we believe that no reasonable person would ever have entered into this contract had he or she known the full facts.

This is what is happening out there at the moment. This is legalised robbery. I commend Deputy Michael McGrath on bringing forward this Bill.

I hope we will have a successful outcome. The people are depending on us to fight their corner and case.

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