Feargal Quinn (Independent) | Oireachtas source

I congratulate Senator Barrett on this Bill and I welcome the Minister of State. I know he is a great listener and will pay attention to what is being said here. One of the great things we can do in this and the other House is to look around the world to see if we can learn anything from other parts of the world. That is what Senator Barrett has done in this case. I welcome the Bill. It is yet another of his very sensible contributions. This Bill is founded upon similar mechanisms that have worked in the US, Canada and European markets. However, the proposed national mortgage and housing corporation would be dissimilar to bodies such as Fannie Mae and Freddie Mac which engaged in reckless practices a number of years ago. They gave mortgages to people who should never have got them and a great number of those people defaulted on the mortgages after the crash of 2008. Subsequently, millions of homes were foreclosed in the United States. The figure could be as high as 4 million repossessions. Although it is quite difficult, I have gone through it a number of times now. The new national mortgage and housing corporation would act as something like a permanent building society. I am not talking about the Irish Permanent Building Society but a permanent building society. It would be considered a public good as it would help to address the massive housing shortage by allowing people to access cheap credit to buy their own homes. There is a social goal of this proposed mechanism, which would be founded upon prudent financial policy.

I welcome more competition in the Irish banking system. Banking experts point to the fact that there is no normal and properly functioning banking market in Ireland. It is clear there is no real competition within the banking sector in Ireland. As we have seen since 2008, there is reluctance at political level to tackle the banks head on. Today Senator Barrett has shown us what we can do. It will not be easy and I am sure there are technical problems with it, but an institution like the national mortgage and housing corporation would mean that the Government would bede facto stoking competition in the sector, which is good for the customer. Mortgages are a vital issue for people. I recently drafted the Central Bank (Emergency Powers) (Variable Interest Rates) Bill 2015 to empower the Central Bank to get banks to reduce variable mortgage interest rates. This is exactly what Senator Barrett will achieve with this. A variable interest rate would mean that when ECB interest rates go up, so too does the mortgage interest rate. Equally, when the ECB rates go down, so do the mortgage rates charged by the banks.

This has not been the case. The Minister for Finance is well aware of the bad behaviour of banks in this respect but has not yet been able to find a solution to it. Earlier in 2015, KBC Bank, Bank of Ireland and Ulster Bank ruled out, at one stage or another, cutting their variable mortgage interest rates. This is shameless profiteering by banks and something has to be done about it. One of those banks decided to give a lower rate to new customers but not to existing customers. That is not good business. A bank should look after its customers. It will hope to get new customers but it should not do it that way. However, I welcome KBC's change of tack announced last month to cut its variable interest rates.

We must remember that 300,000 people in Ireland are locked into high mortgage rates and cannot escape from them. To give an example, someone with a €300,000 standard variable rate mortgage with Ulster Bank is paying almost €650 a month more than someone with a tracker mortgage. That is nearly €8,000 every year down the drain that could be spent on something worthwhile such as a child's education. There are a massive number of people suffering and the Government should try to help them. We have a solution here. It is based on what has been done in other countries but that is the point of it. We should do that more often. Measures such as this Bill need to go in tandem with other steps to address the housing shortage. For instance, we should be introducing measures to ensure better conditions for those who want to rent rather than buy. Let us consider the housing sectors of our European neighbours. According to EUROSTAT, approximately 40% of people rent in France, while in Germany the proportion is approximately 50%. Renting is seen as very normal in those countries, unlike in Ireland. We still have many problems when it comes to renting. For instance, a great number of landlords favour short-term contracts, meaning it is easier for them to throw people out quite easily when their contract has expired. In Belgium, the standard rental contract is nine years. In Germany, leases are for an indefinite duration. Tenants have very strong protection and, provided they pay their rent, they are virtually immune from eviction or major rent increases. These sorts of lease periods seem long but the thinking is that many people rent for the whole of their lives.

We should realise that Dublin needs to convert some retail property or vacant property into housing units. The Government should remove red tape and ease planning regulations so vacant and underused buildings can be used.

Senator Barrett has shown us a way in which we can get something done. We can get it done easily. I hope that the Bill will not be defeated. I hope the Minister of State will accept it or say that, although there may be some steps to take, they will be taken. I congratulate Senator Barrett and his team on being able to put this Bill together. The Senator has given us light at the end of the tunnel showing that the objective can be achieved. I urge the Government to pay careful attention to the legislation and ensure we learn from it.