Bernard Durkan (Kildare North, Fine Gael)
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65. To ask the Minister for Finance the extent of discussions he has had with the European Central Bank and the Central Bank here in the context of bringing mortgage interest rates into line with the European norm; and if he will make a statement on the matter. [10203/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, the European Central Bank is independently responsible for the formulation and implementation of monetary policy in the euro area. Accordingly it is a matter for the ECB to set official interest rates and to operate the other tools for the implementation of its monetary policy decisions. In the context of the Single Supervisory Mechanism, the ECB also plays a key role in the prudential supervision of European banks and the maintenance of the stability of the overall banking system.

While the ECB will have an interest in matters relating to the transmission of monetary policy, the ECB does not have a role in the setting of lending or deposit interest rates by individual banks or other financial institutions. That is a commercial and business matter for individual banks. Nevertheless, when he appeared before the Joint Oireachtas Committee on Finance, Public Expenditure and Reform and Taoiseach in November 2018 with the Governor of the Central Bank of Ireland, the President of the ECB acknowledged that lending rates in Ireland are high. More particularly, this is the case in relation to the provision of new mortgage credit. As the Deputy is aware, there are a number of factors for this such as the cost of funds, the need for lenders to reflect the level of credit risk (and which is still an important factor in Ireland as a consequence of the banking and property collapse) and the need for banks to build up adequate capital buffers to meet increasing regulatory requirements and to withstand future adverse shocks. The high level of concentration in the market for the provision of new mortgage credit is also a relevant factor.

I also maintain close contact with the Governor of the Central Bank and it should be noted that the Bank has recently made a number of changes to the Consumer Protection Code which are designed to facilitate and promote mortgage switching through enhancing the transparency of the mortgage framework, to provide additional protections to consumers who decide to switch mortgage provider and overall to help consumers make savings on their mortgage repayments.