Michael McGrath (Cork South Central, Fianna Fail)
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60. To ask the Minister for Finance his views on comments by the president of the ECB that Ireland lacks competition in the mortgage market; his plans to address this issue; and if he will make a statement on the matter. [47646/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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I note the comments made by ECB President Draghi to the Oireachtas Finance, Public and Expenditure and Reform and Taoiseach Committee.

As the Deputy is aware, the financial crash and its immediate aftermath had a significant impact on the Irish mortgage market, with a steep increase in mortgage arrears, a sharp slowdown in the rate of new mortgage lending and the withdrawal of some lenders from the Irish market. While there has been a considerable improvement in the overall economy and mortgage market since then, for example overall arrears have fallen and new lending has increased, it is accepted that the financial crash continues to impact on the mortgage market and that problems still remain. One of the legacy issues which remains is the current high level of concentration in the Irish mortgage market.

One of the ways to address this, as highlighted by President Draghi, is to further promote financial integration at a European level. The EU Mortgage Credit Directive has been a positive move in this direction as it provides for the first time a common minimum set of rules across the EU in relation to the provision of residential mortgage credit to consumers. This directive was transposed into Irish law in 2016 by the European Union (Consumer Mortgage Credit Agreements) Regulations. More generally, President Draghi, indicated that the completion of banking union and the development of a more integrated capital market would better enable financial service providers to more easily transact and provide financial services across borders.

The issue of standard variable mortgage rates is a significant one for this Government, and it is committed to efforts to reduce the cost of secured mortgage lending and to promote competition in the supply of mortgage finance. The Government is of the opinion that increased competition 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. The Government will encourage and support moves made by any new lender who wants to enter the market and offer new sources of credit to borrowers.

Also the cost of mortgage credit is an issue that the Government keeps under active review in its ongoing engagement with mortgage lenders and the Central Bank. Lenders are now offering an increasing diverse range of variable interest rate mortgage products and savings can be made by borrowers with their existing mortgage provider, in particular as they build up equity in their property, or by more actively considering options to switch mortgage provider. Recent enhancements have been made to the Central Bank Consumer Protection Code in order to better facilitate the mortgage switching process between lenders (which will come into effect from January next) and also to require lenders to provide information to their borrowers on their other mortgage products that could provide savings to their customers at that point in time.