Brendan Howlin (Wexford, Labour)
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Question 161: To ask the Minister for Finance further to Parliamentary Question No. 187 of 6 May 2009, if the Financial Regulator has advised in relation to the position of persons on fixed rate mortgages who incur financial penalties if they opt to change to variable rate mortgages; the nature of such advice; and if he will make a statement on the matter. [27709/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy's question refers to the redemption fee applied by mortgage providers in circumstances where a customer seeks to break a fixed rate mortgage. On 26 March 2009 I undertook to contact the Consumer Director of the Financial Regulator about these fees. As a result the Financial Regulator carried out a review, a report of which has been submitted to my Department. The Financial Regulator asked for specific information from the mortgage lenders. This included the submission of independent actuarial reports based on the formulae applied by the different lenders. The FR's review based on the information that it had received concludes that lenders are not applying unjustified penalties intended to dissuade borrowers from early redemption of fixed rate mortgages. The principal findings indicate that the early redemption fee calculation in all cases appears to seek to cover the costs and lenders do not generally apply additional fees in the case of early redemption. However, a number of the reports received highlighted certain issues that will require follow-up. Additional work is being carried out by the Financial Regulator with regard to the information provided by institutions, which will include consideration of the mortgage funding models employed by them.