Noel Grealish (Galway West, Independent)
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62. To ask the Minister for Finance in view of the fact that he cannot comment on or become involved in the detailed mortgage position of mortgage holders, his views on regulated banks ignoring the European Central Bank base rate for borrowers, except when it is increased; his further views on whether it is in the national interest for him to continue to be at arms length under the relationship framework, particularly at a time of continuing mortgage distress; and if he will make a statement on the matter. [39199/14]

Michael Noonan (Limerick City, Fine Gael)
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The Government is acutely aware of the increasing financial stress that some households are facing in the current environment and has numerous policies designed to tackle and alleviate these difficulties. However neither the Central Bank nor the Department of Finance has a statutory function in relation to interest rate decisions made by individual lending institutions at any particular time. Moreover ultimately the pricing of financial products, including  mortgage interest rates, is a commercial matter for the management and the Boards of the banks. The Relationship Frameworks will remain in place as it would be inappropriate for the State, or politicians for that matter, to  intervene directly in the day to day running of these institutions while we retain significant positions of ownership.

I should also point out that while the cost of funds for the Irish banks has come down significantly in the past couple of years, which has been a key objective for my Department, it is still much higher than the ECB base rate. At  a system level, the amount of ECB funding has  also reduced significantly and is a fraction of where it was at the peak of the crisis so the ECB base rate is not the best approximation of the average rate that banks pay for their funding. Finally the banks must ensure that the rate they lend at is economically sustainable and provides a return for the bank and ultimately the State as a shareholder. Without a positive return on their lending, banks would not be capable of maintaining and growing their capital base and thus be in a position to support the economy.