Gerald Nash (Louth, Labour) | Oireachtas source

As a rule, I remain somewhat sceptical about the efficacy of mortgage interest relief in delivering real help to the households who need it most, because our experience has been the mortgage interest relief system in the past tended to favour the better-off with bigger mortgages and therefore assets of greater value. However, in light of five ECB rate hikes since last July, there is an argument for a measure like this that is targeted and time-limited. The Irish banks were initially reluctant to pass on these ECB hikes to domestic mortgage holders but inevitably that has changed more recently and householders now face major hikes in their mortgage bills. It is in that context that I and the Labour Party support this motion for targeted and temporary mortgage interest relief equivalent to 30% of the increased cost of the mortgage, with a cap of €1,500 per annum. I note the Minister's own scepticism and reluctance to back this particular approach but the principle enshrined in the motion should at least be explored by him and his Department.

We would like to see the Government go further and adopt the Labour Party approach to deliver real relief to mortgage holders by guarding against future rate hikes through the introduction of a mortgage rate cap, which is a principle the Minister is familiar with. People are already being hammered by the cost-of-living crisis, so news that rates are set to rise again will come as another body blow to households that are, as we and the Minister know too well, already struggling to make ends meet. As the Minister articulated earlier, many of the once-off reliefs and expenditures introduced by the Government towards the end of last year are running out. Accordingly, people at the sharper end of the cost-of-living crisis are really going to struggle over the next few months if other initiatives are not taken by the Government. There is a real inevitability to rates continuing to rise and rise and that is why the Government must urgently get to grips with this situation. It must stop playing catch-up, as it did with efforts to meet the rising energy costs problem and associated cost-of-living issues.

The Labour Party proposed legislation to take the heat out of this situation and to relieve some of the financial pressure on mortgage holders. Our Central Bank (Variable Rate Mortgages) Bill 2022 would enable the regulator to impose caps on mortgage interest rates charged by banks where a market failure is shown. There has objectively been a market failure here. The Minister will agree, or at least his past comments align with the contention there has been, and is, a market failure in the context of the residential mortgage market. That is notwithstanding the figures he put on record a few moments ago showing where Irish new mortgage rates sit in a European context. That was not always the case. For the last few years, Irish variable rate mortgage holders were paying the second-highest mortgage interest rates in the EU. It is not because of any Government initiative that the figures have changed and the Irish situation is now a case of mid-table respectability or at the lower end of the spectrum but because the banks have, up to now, been at least reticent to pass on some of the ECB interest rates, though that is changing.

The Labour Party legislation to which I referred is similar to and draws inspiration from a Bill tabled by the Minister when he was Fianna Fáil spokesperson on finance in 2015 and 2016. If it was the case that in a period of low interest rates as prevailed in 2015 and 2016 when he proposed that Bill, which attracted great attention and scrutiny and went to the pre-legislative scrutiny stage at committee, then surely there is a necessity for a Bill like this now in a very changed environment. It was okay at a time when we had low interest rates and now, during a period of higher rates the Minister appears to have changed his position. I find that quite extraordinary. The Oireachtas has already imposed a cap on the interest rates charged by moneylenders, so there is a strong precedent for action. We remember the exploration of the legislation published to rein in moneylenders and introduce that cap and it shows there is no constitutional impediment to enabling the Central Bank to intervene in the market and introduce reasonable caps on interest rates charged by financial service providers once a process of examining the market has been undertaken, along with a range of other proportionate steps. The only impediment to such legislation is political will.

The Government must do all it can to cushion the body blow of these interest rate rises and we believe a cap on mortgage interest rates will save families thousands of euro over the lifetime of their loans. According to media reports last week mortgage interest rates could soar towards 4% this summer as Irish banks begin to pass the costs on to more customers. AIB is introducing rate increases across all mortgage types for the first time since the ECB began to hike rates last July and this move, as the Minister knows, will affect thousands of borrowers. AIB made the move just hours after the ECB announced the latest hike in rates of 0.5%, bringing the total increase in rates since last summer to 3%. The AIB rise will affect all tracker and fixed mortgages. AIB, Bank of Ireland and Permanent TSB have spared their variable rate customers until now despite the European Central Bank having raised rates four times in six months to last December, and have only passed some of the hikes to fixed products.

When asked if the latest rise will be the last, President of the European Central Bank, Christine Lagarde, ominously said "No" five times and she was quite emphatic. She said they know they have ground to cover and they know they are not done, when she spoke about interest rate rises and the use of those tools available to them to tackle inflation.

Five successive hikes have now added up to €400 per month to a €330,000 mortgage, with a further rise next month to add approximately €88 more. Bank of Ireland has been slow to increase mortgage rates so far in a bid to take more market share, it seems, but the bank's shareholders are now calling for higher prices, and rising rates there could be around the corner, affecting tens of thousands of more bank customers. This is an already enormously profitable bank, a bank that seems to be on its way to posting profits of approximately €1 billion the next time it posts.

Who is representing the public interest here? It does not seem to be the Government. I urge the Minister to not act and behave as a commentator and to make what interventions he can to try to support those who need the most support in terms of rising interest rates.

In the brief time I have left, I want to talk to the Minister about the case of Jimmy Crosbie, a father of two from Ardee who works as a taxi driver. The name might be familiar to the Minister because Jimmy spoke to "Prime Time" last week about the situation in which he finds himself. He had his residential mortgage, the mortgage on his principal private residence, with Permanent TSB. In 2015 he organised a split mortgage. It was a performing loan in layperson's language and in terms of our understanding of it. He never missed a payment. In 2019, and he spoke to "Prime Time" about this, Glenbeigh bought his mortgage and it is now being serviced by Pepper. The kinds of interest rates people like Jimmy are now being charged are absolutely extortionate. They would make the mafia blush and are putting families like Jimmy's in a very difficult situation indeed.

The Minister told Mark Paul of The Irish Timesa couple of weeks ago that he had written to the Central Bank to express his concerns about the high rates of interest being charged by financial institutions affecting people like Jimmy. Has the Central Bank responded to the Minister at this stage? From media reports, I believe the Minister asked the Central Bank if it required additional powers to further regulate these funds and these financial service providers. Last week, I asked the Minister for a copy of that letter through a parliamentary question but all I got was essentially a repeat of what appeared in The Irish Times. That particular letter is FOI-able. It is a public document so I do not see any reason it could not have been provided in the public interest. What did the Minister ask the Central Bank in terms of regulatory powers? What does the Minister plan to do to support people like Jimmy Crosbie to make ends meet and to make their mortgage payments in this very difficult environment?

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