Louise O'Reilly (Dublin Fingal, Sinn Fein) | Oireachtas source

I thank Deputy Boyd Barrett for bringing this legislation before the Dáil. Workers and families have seen a sharp, sudden and significant increase in their mortgage costs since 2022. Since the European Central Bank first increased its key interest rates in July of that year, average mortgage interest costs have increased by a whopping 70%. For so many, these increases have been crucifying, with many households paying thousands of euro more per year in mortgage interest compared with two years ago.

My party has been raising this issue for some time. From 2022, Sinn Féin called for the introduction of targeted mortgage interest relief that would provide relief at source, supporting households with 30% of their increased interest costs and providing relief of up to €1,500. The Government criticised and opposed this proposal for months, only to perform a screeching U-turn by introducing a mortgage interest tax credit in the budget. Of course, there are serious problems with this credit. It is estimated that up to 138,000 mortgage holders, who have seen their mortgage costs rise, are locked out of the credit because their mortgage balance was less than €80,000 in 2022. According to the most recent figures, less than 19,000 households have availed of the tax credit, with only €18 million of the €125 million allocated to the credit having been received by households. There is also the unacceptable situation whereby low-income households cannot access the tax credit because they do not have an income tax liability. We are aware of lone parents who have seen their mortgage costs soar but are unable to receive the credit simply because they are in receipt of the single person child carer tax credit. We have raised this issue many times. It must be addressed.

Our mortgage market is highly dysfunctional. Our retail banking sector is highly concentrated, which does little to drive down interest rates and prices, given the lack of competition in the market. On the issue of mortgage interest rates, the average Irish interest rate on outstanding mortgages is higher than the euro area average. On the other hand, we have seen a massive growth in the profits of our retail banks since the ECB began increasing its interest rates. It is true to say that this surge in profits has largely been a function of the ECB increasing interest rates and the net interest income of banks soaring as a result. All the while ordinary households feel the squeeze.

We then have those households that had their mortgage loans sold off to vulture funds. This is something Sinn Féin has always opposed and repeatedly warned of. Those warnings went unheeded, with the then finance Minister, Deputy Donohoe, even going so far as to say he would be happy if his mortgage were held by a vulture fund. Of course, this was nonsense, which is something anyone whose loan is held by a vulture fund will know only too well. Today, those people are being charged interest rates so much higher than those charged by retail banks, with many unable to switch to a mainstream lender. They are effectively mortgage prisoners with some facing interest rates higher than 7%. I understand the message from the Minister of State on the floor of the Dáil today is to shop around. It is the second time we are hearing that from Fianna Fáil. It did not go well for them the first time. These people know that products may be available but they are effectively mortgage prisoners. If they could switch, believe me, they would. They must be offered a pathway back to the mainstream mortgage market.

The Bill proposes a cap on mortgage interest rates effectively set by the Oireachtas. Similar Bills have been brought before the Dáil previously. My colleague, Deputy Doherty, introduced the Central Bank (Mortgage Interest Rates) Bill in 2015, which would have granted the Central Bank powers to impose a cap on variable mortgage interest rates. In 2016, the Minister, Deputy Michael McGrath, introduced the Central Bank (Variable Rate Mortgages) Bill, which would have also granted the Central Bank powers to impose a cap on variable mortgage interest rates in certain circumstances. In 2022, Deputy Nash introduced the same legislation. This legislation differs in that instead of granting the Central Bank powers, the Oireachtas would direct the bank to impose a cap set at 3% APR. It proposes that the Oireachtas effectively regulates mortgage interest rates. Of course, we may question whether the Oireachtas should become responsible for the interest rates banks are permitted to charge or whether such powers should be granted to the Central Bank. What is clear is that the interest rates many are facing, including those charged by vulture funds, are excessive and crippling, and action is very much needed.

It is unacceptable that these mortgage holders had their loans sold off by banks and were promised that they would enjoy all the same protections, but now face interest rates so much higher than those being charged by their previous lenders. Therefore, there is merit in the Bill progressing to Committee Stage. At that stage, the committee can discuss and assess how best to address this problem to ensure that mortgage interest rates charged are fair and transparent, not excessive and punitive.

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