Finian McGrath (Dublin North Central, Independent)
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Question 77: To ask the Minister for Finance if he will advise on the case in respect of a person (details supplied). [10573/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The choice of mortgage product ultimately rests with consumers in light of their assessment of the terms and conditions that their lending institution offers. The decision of borrowers is influenced by a range of factors such as their personal preferences and their own assessment of the relative merits of fixed and variable rate mortgages.

Generally mortgages are for long periods. To some consumers a fixed interest rate on a mortgage offers peace of mind in that the borrower benefits from certainty regarding the cost of their mortgage, does not need to be concerned with changes in mortgage interest rates and accordingly he or she can budget more confidently.

Where a bank offers a fixed rate over a certain period it incurs additional costs in obtaining fixed or other funding in respect of the loan over the period. The additional costs will reflect both the market view in relation to future trends in interest rates for the period and the fact that longer term deposits generally attract higher interest rates than short term. In addition, if a borrower wishes to break a fixed interest rate contract prior to the end of the agreed term in order to change to a variable interest rate contract, it will generally result in funding costs for the lender concerned. If financial institutions were prohibited from charging customers for the funding costs, the price and availability of fixed rate mortgages is likely to be adversely affected.