Gerald Nash (Louth, Labour)
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66. To ask the Minister for Finance if he is concerned at the impact recent and predicted ECB interest rate rises will have on the ability of first-time buyers to afford to purchase a home and service a mortgage; if he or his officials have had discussions in relation to any policy interventions under consideration in regard to the impact of continuing rate rises on borrowers; and if he will make a statement on the matter. [11263/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The Government appreciates the difficulties that the current inflation and interest rate environment is causing for many households, including those households servicing or applying for a mortgage.

The European Central Bank (ECB), which has an independent mandate to maintain price stability, is taking action to bring inflation down to its desired target of two per cent over the medium term. Interest rates are the main tool to combat inflation and the ECB has now increased its official interest rates five times since last summer.

Over this relatively short period, its key lending rate has increased from zero to its current level of 3%. The increase in official interest rates will feed into the general level of interest rates throughout the economy but decisions taken by mortgage entities in relation to passing on interest rate increases are a matter for those firms which are run on an independent commercial basis.

Neither the Central Bank nor I as Minister for Finance have any function or role in such decision making matters by credit institutions.

Nevertheless, there is a comprehensive consumer protection framework in place related to mortgages and mortgage lending. For example, the Central Bank's Consumer Protection Code and the Code of Conduct on Mortgage Arrears, seeks to ensure that Central Bank regulated entities 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.

In addition, the Central Bank introduced a number of increased protections for variable rate mortgage holders in February 2017. The enhanced measures, which are provided for in the Consumer Protection Code 2012 (the Code) require lenders to explain to borrowers how their variable interest rates have been set, including in the event of an increase.

The measures also improve the level of information required to be provided to borrowers on variable rates annually about other mortgage products available from their lender which could provide savings for the borrower. The lender must also signpost the borrower to the CCPC’s mortgage switching tool. These are important regulatory provisions and I believe will be of benefit to existing and future mortgage holders in the current interest rate environment.

In relation to policy interventions to assist households, including mortgaged households, more generally, Budget 2023 focused on easing the burden of inflation on household and businesses and, in addition to a large package of taxation and welfare measures, it also contained a range of one-off cost of living measures amounting to over €4.1 billion to help meet the increased cost of energy and other living expenses.

Last month, in recognition of these ongoing challenges, the Government added to these Budget measures, with a further €1.2 billion package of measures which will help with the bills, and to ensure there is no cliff-edge for the temporary measures already in place.