Robert Troy (Longford-Westmeath, Fianna Fail)
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109. To ask the Minister for Finance if any action can be taken for borrowers who previously experienced difficulties in making mortgage repayments to banks and had their loans sold to non-bank lenders companies and are now stuck paying very high variable mortgage repayments, with most credit servicing firms not offering new fixed rates; and if he will make a statement on the matter. [11153/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The type of mortgages, including fixed or variable rate mortgages, offered by different categories of Central Bank regulated entity is a commercial matter for each individual lender. In addition, the mortgage interest rates they charge and the basis for the adjustment of the interest rate is, subject to the terms of the particular contract, a commercial matter for individual lenders having regard to their own particular business and operational policies.

Where a mortgage is sold, the new mortgage entity acquires the loan on the existing contract terms and so it will only be able to adjust the interest rate in line with those existing contract terms.

In addition, as part of its Consumer Protection framework, the Central Bank has put in place a range of measures in order to protect consumers who take out or have a mortgage. The consumer protection framework seeks to ensure that lenders are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle.

For example, through protections at the initial marketing/advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties.

The framework includes various Central Bank Statutory Codes of Conduct such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013. All regulated entities, including retail credit firms and credit servicing firms, are required to comply with the provisions of these codes in their dealings with consumers.

The Consumer Protection Code 2012 requires that all regulated entities, including entities which service loans, explain to borrowers how their variable interest rates have been set including in the event of an increase. The lender must also signpost the borrower to the CCPC’s mortgage switching tool.

Where a borrower is facing an increase in the rate of their mortgage, they can seek to move to another product at their existing lender or switch to a different lender, noting this will be subject to the lending criteria, terms and conditions of the lender to whom they apply. In this respect, the Central Bank has advised that it has engaged with lenders to ensure the operational capacity is in place to facilitate people to switch at a system wide level.

The Code of Conduct on Mortgage Arrears (CCMA) provides specific protections for borrowers in arrears or facing the prospect of arrears on a loan secured on a primary residence. In particular, a regulated entity must pro-actively encourage borrowers to engage with it about financial difficulties which may prevent the borrower from meeting his/her mortgage repayments. Also, where a borrower is experiencing repayment difficulty, a regulated entity must explore all of the options for alternative repayment arrangements (known as ARAs) offered by the entity to determine if a more suitable and sustainable repayment option is available based on the borrower’s individual circumstances.

If a borrower is not satisfied with the options proposed, or if the regulated entity declines to offer an ARA, an appeals mechanism is provided for in the CCMA. In addition, a regulated entity must review an ARA at intervals that are appropriate to the type and duration of the arrangement, including at least 30 calendar days in advance of an ARA coming to an end.