Written answers

Thursday, 11 October 2012

Department of Finance

Mortgage Interest Rates Issues

Photo of Robert DowdsRobert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance the extent to which Allied Irish Bank has increased the interest rate for its variable-rate mortgage holders. [43887/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy will be aware that the Bank’s policy in relation to interest rates is a matter for the management and board of the institution. I have no role in the day-to-day commercial and operational decisions of the banks, which include these matters. These decisions are taken by the board and management of the institution. Notwithstanding the fact that the State is a significant shareholder in the institution, I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. However, AIB has informed me that it has announced two variable mortgage interest rate increases in 2012. The first increase to variable rates of 50bps was announced on 27 July 2012, and became effective from 4 September 2012. The second increase of an additional 50bps to variable rates was announced on 3 October 2012, and will become effective from 13 November 2012. In addition the Bank did not pass on an ECB rate decrease of 25bps in July 2012, though this must be seen in the context of the two 25bps ECB rate increases in April and July 2011 that AIB did not pass on to mortgage customers.

AIB has also informed me that even following the recent increases, it will still continue to have the lowest mortgage rate in the Irish market.

Photo of Robert DowdsRobert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance if he will intervene with Allied Irish Bank to request it to reverse its raising of the interest rate on variable-rate mortgages; and if he will make a statement on the matter. [43888/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy will be aware that the Bank’s policy in relation to interest rates is a matter for the management and board of the institution. I have no role in the day-to-day commercial and operational decisions of the banks, which include these matters. These decisions are taken by the board and management of the institution. Notwithstanding the fact that the State is a significant shareholder in the institution, I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. However, the Government is aware of the significant difficulties some homeowners are facing in meeting their mortgage obligations and it is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty. In this regard, the Government is now actively implementing the main recommendations contained in the report of the Inter-Departmental Working Group on Mortgage Arrears.

A number of significant milestones have now been achieved. The Personal Insolvency Bill was approved by Government and published last June and the Committee stage of the Bill was passed by the Dáil last month. The Minister for Housing and Planning has formally launched the “mortgage to rent” scheme on a nationwide basis. Also an extensive independent mortgage advice framework has now been put in place by the Minister of Social Protection comprising (i) an enhanced website www.keepingyourhome.ie (ii) a Mortgage Arrears information helpline, and (iii) the provision of free independent ‘one-to-one’ professional financial advice to borrowers when considering a long term forbearance/resolution offer from their lender. The list of accountants providing this service is located on the www.keepingyourhome.ie website.

The Government remains very committed to progressing these measures, which are in addition to existing supports such as the protections afforded by the Central Bank Code of Conduct on Mortgage Arrears, to assist genuine mortgage holders in difficulty and the Government sub-committee on mortgage arrears, which is chaired by An Taoiseach, continues to meet to ensure this receives priority attention across relevant Departments and agencies.

Comments

No comments

Log in or join to post a public comment.