Róisín Shortall (Dublin North West, Independent)
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293. To ask the Minister for Finance the consideration he has given to introducing measures to provide the Central Bank of Ireland with the power to set maximum mortgage interest rates in certain circumstances, in view of the reluctance of Irish banks to reduce mortgage interest rates in line with the rest of the eurozone; in view of the enormous cost to the Irish people of bailing out the banks through significant additional taxes, such as the universal social charge, and other charges, his views that such action in respect of mortgage interest rates is now urgently required. [18609/15]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, I outlined last week in the Spring Economic Statement that the mortgage interest rates being charged by the Banks in Ireland have not been reduced in line with the rate reduction by the ECB.  I discussed the issue of mortgage interest rates with the Governor of the Central Bank on 2 April. As a result of this meeting the Governor is currently reviewing the issue of the standard variable rates charged by the lenders. The Central Bank submitted the report to my Department yesterday and I am considering the contents.  I have also arranged to meet the six principal Mortgage Lenders in order to discuss this issue.

The lending institutions in Ireland - including those in which the State has a significant shareholding - are independent commercial entities. I, as Minister for Finance, have no statutory role in relation to regulated financial institutions setting interest rates. The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned.

Equally, the Central Bank has no statutory role in the setting of interest rates by regulated entities, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997 and the requirement to be notified of penalty or surcharge interest imposed in respect of arrears. However, if the Central Bank propose to me that they should get control of  the regulation of interest rates I would legislate for that.

It should also be noted that there have been moves on interest rates. On 1 May, AIB Group announced a number of reductions to its mortgage interest rates for owner occupier and buy-to-let mortgages.

A series of reductions over a fixed time frame would be acceptable to me and in that context I welcome AIB's announcement as a good first step. Competition between the banks will be crucial in ensuring that the price that the customers have to pay moves in the right direction.