Kevin Humphreys (Dublin South East, Labour)
Link to this: Individually | In context

Question 143: To ask the Minister for Finance if his attention has been drawn to the fact that the Permanent TSB standard variable rate on a 25-year investment mortgage has increased from 3.84% in April 2009 to 6.84% today, while in the same period, the ECB rate dropped from 1.5% to 1%; if he agrees that these interest rate hikes will have an affect on the arrears or repossession rate and further cripple Irish financial institutions by making current loans unsustainable; if he has a strategy for addressing this problem; the details of that strategy; and if he will make a statement on the matter. [2205/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

1I am aware of the interest rates charged by Permanent TSB. However, the lending institutions in Ireland, including those in which the State has a significant shareholding, are independent commercial entities. Ultimately the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and board of each lending institution, having due regard to their customers and the impact on profitability, particularly where the cost of funding to each lending institution, including deposit pricing, is under pressure.

I have no responsibility for any increases/decreases in the variable mortgage rates charged by Permanent TSB. However, the Central Bank has advised me that, within its existing powers and through the use of persuasion, it will continue to engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds. They also advised me that they wrote to all lenders in October 2011 and asked them to consider the impact on arrears when considering any future interest rate increases.

The Deputy will be aware of the report of the Inter-Departmental Group on Mortgage Arrears which was published last October. The report sets out a number of recommendations to address the situation of those in mortgage arrears. The report stated that the issue of mortgage difficulty can only be addressed in an efficient way on a case by case basis. Arising from the report, a number of developments are underway that will be of assistance to mortgage holders experiencing significant difficulty.

Joe Higgins (Dublin West, Socialist Party)
Link to this: Individually | In context

Question 144: To ask the Minister for Finance the reason there is such a difference in variable interest rates between the State-owned AIB and Permanent TSB. [2211/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

1The lending institutions in Ireland, including those in which the State has a significant shareholding, are independent commercial entities. Ultimately the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and board of each lending institution, having due regard to their customers and the impact on profitability, particularly where the cost of funding to each lending institution, including deposit pricing, is under pressure.

Neither the Central Bank nor I have any responsibility for any variation in the variable mortgage interest rates charged by the two institutions referred to by the Deputy. However, the Central Bank has advised me that, within its existing powers and through the use of persuasion, it will continue to engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds.