Pearse Doherty (Donegal South West, Sinn Fein)
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40. To ask the Minister for Finance the number of banks that have decreased their standard variable interest rates in 2015; the size of these changes; and his plans to legislate to allow the Central Bank of Ireland to cap these rates. [40343/15]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, I have taken steps to ensure that banks provide options for mortgage holders to reduce their repayments.  Last May, I met with the six main mortgage lenders and outlined my view that the standard variable rate being charged to Irish customers was too high.  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. In September I concluded a series of follow up meetings with these banks and the reality is that the majority have put options in place to allow borrowers reduce their repayments.

It is up to the individual banks themselves to advertise their rates and products but as I am sure you are aware, some banks have focussed on fixed rate offerings or rates based on loan-to-value, while others have reduced their variable rates.  I had asked the banks to provide options by which borrowers could reduce their monthly repayments and I believe options have been put in place.

Obviously, it is a matter for each individual borrower to decide what suits their circumstances but I encourage borrowers to contact their bank to see what is available to them or consider moving to another bank, where possible, if the offer is not satisfactory. For example, some fixed rates are now substantially lower than some variable rate products and therefore could result in significant savings for customers.

The reality of the situation is that the majority of lenders have put options in place to allow borrowers reduce their repayments, however my Department will continue to keep the situation under review.

There has been discussion in the public domain regarding whether the regulation of interest rates would lead to a reduction in mortgage costs for borrowers. I believe that competition rather than regulation represents the best long term solution to this issue and Central Bank and ESRI research supports this position.

In this regard, the Governor of the Central Bank has indicated his opposition to the administrative control of interest rates. While he acknowledged that a reduction in bank interest rates benefit the economy at large, it was his firm belief that the introduction of administrative control on interest rates in Ireland would be bad for the country as a whole in the medium term including because of its negative effect on the entry of other banks to the market.

You will also be aware that on 12 November the Central Bank published a consultation paper on proposed increased protections for variable rate mortgage customers. This is called Consultation Paper CP98 and is available on their website. The suggested measures fall under three broad categories:

- Lenders would be required to publish a summary statement of the factors that impact on their variable rate and the criteria and procedures that apply to setting such rates;

- On an annual basis lenders would be required to notify variable borrowers of alternative mortgage options.  They would also have to notify borrowers of these options when increasing SVR rates and provide borrowers with a link to the Competition and Consumer Protection (CCPC) website to assist borrowers who wish to switch;

- The Central Bank is consulting on increasing the notification period for variable rate increases (it is currently 30 days) and they are also consulting on a proposal to require the lender to state the reason for changing the rate.

The closing date for submissions to the public consultation is 12 February 2016.