Michael Harty (Clare, Independent)
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239. To ask the Minister for Finance the reason why interests rates are high here compared to other EU countries; and if he will make a statement on the matter. [46699/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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There is a variety of factors which result in a disparity between mortgage interest rates in Ireland and other EU countries. Some of these include differences in national legal and housing systems, cultural preferences, the proximity of lenders to borrowers. More directly, credit and market conditions, mortgage default rates and the funding of mortgage credit will also be relevant factors.

There have, however, been some developments which seek to promote a more harmonised market for credit across the EU. In particular, the 2014 Mortgage Credit Directive, which has now been transposed into Irish law by the European Union (Consumer Mortgage Credit Agreements) Regulations 2016, seeks to develop a more harmonised, efficient and competitive internal market for the provision of residential mortgages to consumer borrowers and this should help to promote the closer integration of EU mortgage markets over time.

In terms of the national context, the issue of the level of variable mortgage rates is an important one for this Government and it is committed to reducing the cost of secured mortgage lending and promoting competition in the supply of mortgage finance. To that end, the Competition and Consumer Protection Commission (CCPC) has recently produced a report which sets out options for consideration to help improve the level of competition and general efficiency of the market. Additionally, the Central Bank has recently carried out research which showed the scope for borrowers to save money by switching mortgages. 

Following on from this, and building on the 2016 addendum to the Consumer Protection Code in relation to standard variable rate mortgage holders, last August the Central Bank  published a consultation paper proposing new measures which would enhance the framework of protections for variable rate mortgage holders and in particular to require lenders to, inter alia, better inform consumers about other available mortgage options that could save them money, to help them compare their existing mortgage to other mortgage options and to provide consumers with standardised switching information. A copy of the Consultation Paper is available on the Central Bank’s website and the consultation process was open for comment until 1 November 2017.

In overall terms, the Government is of the opinion that the development of a healthy banking system, which is one which delivers increased competition, which is in a position to provide finance to credit worthy customers and which is also resilient to economic and financial market shocks, 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.