Michael Noonan (Limerick City, Fine Gael)
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The issue of standard variable mortgage rates is a significant one for this Government and it has made it clear that it is not acceptable for lenders to charge excessive rates on such mortgages.  The Programme for a Partnership Government, therefore, set out a number of important and practical measures which can be taken to improve the position of variable rate mortgage holders.

Firstly, it wishes to promote competition in the supply of mortgage finance.  To that end, our colleague, the Minister for Jobs, Enterprise and Innovation, has asked the Competition and Consumer Protection Commission (CCPC) to work with the Central Bank to set out options for Government in terms of market structure, legislation and regulation to lower the cost of secured mortgage lending and to improve the degree of competition and consumer protection.  I have been informed that, in line with section 10 (3) of the Competition and Consumer Protection Act 2014, the CCPC will undertake an exercise which will involve:-

(i) setting out how competition in the mortgage market operates in terms of interest rates and mortgage approval with a focus on outcomes in comparator jurisdictions;

(ii) setting out what consumers want and expect in a properly functioning mortgage market;

(iii) identifying gaps where competition or consumer protection is inadequate, including a survey of potential new entrants (both traditional and non-traditional) on barriers to entry into the Irish mortgage market;

(iv) outlining of options, including their likely benefits and costs, to reduce the cost of secured mortgage lending and to improve competition and consumer protection in terms of market structure, legislation and regulation.

In liaison with the Central Bank, the CCPC has now commenced this work and it expects that draft options will be available for discussion with stakeholders within the coming months.

Secondly, the Government considers that measures to encourage and promote a greater level of switching in the mortgage market would also help boost the level of competition in the market for existing mortgages.  In particular, the Programme for Government considers that the development of a code of conduct for switching mortgage provider would be a useful and practical initiative which would have the potential to deliver savings to many existing mortgage holders.  To that end, the Central Bank has commenced a programme of research on this topic and the Bank has indicated that the output of this work will be used to inform its consideration of the need for any future work in the area of mortgage switching and specifically around the need for a mortgage switching code.

It should also be recognised that the residential mortgage market now has a certain diversity and that, in addition to the standard variable rate mortgage product, a range of different mortgage products exist, including fixed rate mortgages, loan to value managed variable rate products, trackers and restructured mortgages of various types.

In terms of legislative developments, as the Deputy is aware the Central Bank (Variable Rate Mortgages) Bill 2016, having passed second stage in Dáil Éireann, was subsequently referred to the Select Committee on Finance, Public Expenditure and Reform and Taoiseach.  However, as this is a Private Members' Bill, primary responsibility for progressing the Bill through the next phase of the legislative process now rests with the Bill's proposer and the Select Committee.

In overall terms, the Government is of the opinion that increased competition rather than administrative controls is the best way to ensure that retail lending rates are driven down in a sustainable way for the market as a whole but without giving rise to potentially undesirable consequences for the provision of new mortgage lending. This is a policy area that the Government will keep under active review in its ongoing engagement with mortgage lenders and in implementing the Programme for Government commitments to help deliver on a long term basis better outcomes for all mortgage borrowers.