Micheál Martin (Cork South Central, Fianna Fail)
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104. To ask the Minister for Finance if he will report on the commitments made in the confidence and supply arrangement on taking all necessary action to tackle high variable mortgage rates; and if he will make a statement on the matter. [31256/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The issue of mortgage rates is a significant one for this Government. The Government has initiated a number of important and practical initiatives which have the potential to improve the position of mortgage holders, including variable rate mortgage holders. Firstly the Government wishes to maintain and promote the level of competition in the supply of mortgage finance. To that end, the Competition and Consumer Protection Commission (CCPC) was asked to set out options to improve the degree of competition and consumer protection in the mortgage market. As the Deputy will be aware, the CCPC has recently produced its report and set out a number of short, medium and long term action points for consideration. My Department will now liaise closely with CCPC, the Central Bank and other relevant Departments/agencies as appropriate on these action points to further consider their practical potential to enhance competition.

Secondly, the Government considers that measures to encourage and promote a greater level of switching in the mortgage market would also boost the level of competition in the market for existing mortgages. This point was also recognised by the CCPC report and the Central Bank has also carried out work in this area. For example, last April the Central Bank published research on the experience of consumers in switching mortgage providers. That research found that many consumers who have switched had a positive experience. However, it also found that lenders could do more to facilitate mortgage switching. Dedicated mortgage switching staff, the ability to better compare mortgage products, a less time consuming process and clarity around timelines were highlighted as potential stimulants to mortgage switching.

Following on from this research, the Central Bank will publish a consultation paper in Q3 2017 proposing additional measures to facilitate mortgage switching for those consumers minded to switch. Specific proposals to be explored will include:

- lenders providing greater clarity to consumers on the switching process itself, including as to timeframes and potential costs of switching;

- the benefits of lenders having dedicated switching contact points;

- further disclosure rules at trigger points in the mortgage life cycle (e.g. end of a fixed interest-rate term); and

- the scope for increased co-operation amongst lenders during the mortgage switching process.

This will be an important development as previous Central Bank research had show that borrowers could make savings by switching their mortgage. It should be noted that there has been some downward adjustment in mortgage rates. Recently published Central Bank data on retail interest rates indicated that, in respect of new standard variable rate PDH mortgage business, rates had declined by 19 basis points to 3.38 per cent over the year to March 2017. Fixed rate PDH mortgage rates also declined, with rates fixed for 1-3 years falling by 26 basis points over the same period.

In overall terms, therefore, 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 and to that end it will continue to advance measures which encourage greater competition and switching in the mortgage market.