Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The retail banking review last year highlighted the change in the Irish mortgage market, with the increased level of fixed-rate mortgages. A significant portion of new mortgages, some 85% in July of this year, are now fixed-rate mortgages. This will protect borrowers in the event of a rise in official and market interest rates, at least for the period that the interest rate is fixed. The review noted that there have been innovations in recent years in the mortgage market, from the introduction of long-term fixed rates, mainly by non-bank players. The review also included the recommendation targeted at the retail banking sector to review its existing mortgage product suite to identify opportunities to enhance and expand it for the benefit of bank customers. However, neither the Central Bank nor I have a statutory role in determining the products that lenders provide to their customers as these are commercial decisions for the firms themselves. This also extends to lenders in which the State has a shareholding as these entities must also be run on a commercial and independent basis. Their independence in this context is protected by the relationship framework agreements in place.

The weighted average interest rate on new fixed-rate mortgages was 4.04% in July, which is the most recent available data. This represents an increase of two basis points from June and is 154 basis points higher on an annual basis. The Government is acutely aware of the impact that increases in interest rates and the cost of living more generally are having for many mortgage holders. In that context, I recently met the banks and the other mortgage creditors and made it clear to them that they need to be aware and conscious of these difficulties for their customers and be prepared to respond in a meaningful way. I also indicated that all credit providers should be open to considering applications for new mortgages from all creditworthy borrowers. This includes any borrower whose mortgage is currently serviced by a credit servicing firm or other regulated entity that does not provide new credit. In addition, the Central Bank's regulatory framework requires that lenders are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle, whether borrowing, switching or facing arrears.

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