Written answers

Tuesday, 9 June 2009

Department of Finance

Banking Sector Regulation

8:00 pm

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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Question 100: To ask the Minister for Finance if he has received a report from the Financial Regulator following the investigation requested by him into the cost to mortgage holders of breaking fixed rate mortgages and into the cost to the financial institutions of breaking their own funding arrangements; if he has not received such a report, when it is anticipated; and if he will make a statement on the matter. [22184/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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The Financial Regulator has confirmed to my Department, that all mortgage lenders have provided it with the formula used by that lender when calculating the early redemption fee applying to fixed rate mortgages. The Financial Regulator has also sought independent verification by an actuary that the fee charged by a number of lenders recouped only the loss in funding costs incurred by the lenders due to the early redemption of a fixed rate mortgage. The Financial Regulator has received the majority of the actuarial independent verifications from lenders and is currently reviewing the information received.

The verifications received to date indicate that the formulae applied by lenders seek to recoup the loss to the lender arising from the early redemption of the fixed rate mortgage and do not apply a penalty charge on the borrower. The Financial Regulator is also examining whether any additional costs are being charged. The Financial Regulator has advised that further analysis may be necessary once all of the information is received and reviewed. Should the remaining analysis by the Financial Regulator indicate that further consideration of this issue is required, it will be carried out

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