Finian McGrath (Dublin North Central, Independent)
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334. To ask the Minister for Finance if he will support a matter (details supplied) regarding mortgage interest rates; and if he will make a statement on the matter. [22140/15]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, I met with senior management of Ireland's six main mortgage lenders on 19th and 21st May. The meetings focused on the mortgage market and specifically the comparatively high standard variable rates currently being charged by the banks.

I outlined my view, that Standard Variable Rates being charged in the Irish market are too high.  There was agreement from all lenders that customers should have access to more competitive mortgage products as per my recommendation.

The banks agreed to review their rates and products and, by the beginning of July, to have simple options to reduce monthly mortgage payments for SVR customers. Some of the potential products include lower standard variable rates for existing and new customers, competitive fixed rate products and lower variable rates taking account of loan to value for new and existing customers.

In addition to the issue of rates I also outlined the need for greater competition in the market and the need for a more active and well-resourced campaign by the individual banks. This should focus on promoting awareness of their best offering and how easy it is for customers to take up new products and switch between different institutions if they wish to avail of better rates.

The position of home owners who are in negative equity was also discussed and assurances were sought and received that these homeowners will be able to avail of options to reduce their monthly repayments.

Officials in my Department will review progress over the coming weeks and a follow up set of meeting with each of the six banks will take place in September in advance of the Budget.

The details supplied in relation to this question are similar to those supplied in representations made to me recently.  I have been informed that due to different market and funding dimensions in Northern Ireland, First Trust Bank's current SVR is 4.75%. (First Trust is AIB's Northern Ireland subsidiary).

Introductory rates are commonly offered by banks in Northern Ireland, including First Trust Bank. These exist for a relatively short period (normally 2-3 years). Up-front loan administration and arrangement fees are a feature of markets outside the Republic of Ireland, and are often charged to customers who wish to avail of these lower introductory rates. After the expiry of the discount period, the mortgage rate typically reverts to the SVR which, at 4.75%, is higher than the current AIB SVR rate in the Republic of 3.90%. Loan administration and arrangement fees are not currently charged to mortgage customers in the Republic of Ireland.