Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The determination of interest rates is a commercial decision for individual banks and is the sole responsibility of the board and management of each bank.

Neither the Central Bank of Ireland nor I have a role in setting the interest rates offered by institutions operating in the Irish banking sector. Although the State is a shareholder in some of the banks operating in this jurisdiction, those entities are run on a commercial and independent basis as set out in the Relationship Frameworks.

The Central Bank of Ireland published its latest statistical release on monthly retail interest rates on 13 September 2023. These statistics relate to July 2023 and show that the weighted average interest rate on new Irish mortgage agreements at end-July 2023 was 4.06 per cent, an increase of 2 basis points compared to the previous month and up 143 basis points in annual terms.

The equivalent euro area average rose by 8 basis points to 3.86 per cent. As at end-July, the rate in Ireland exceeded the euro area average by 20 basis points.

Interest rates on household overnight deposits fell to 0.06 per cent in July 2023. The weighted average interest rate on new household deposits with agreed maturity fell to 1.89 per cent in July, reflecting compositional factors rather than a fall in rates offered by any institution. The equivalent rate in the euro area was 2.83 per cent.

While I or the Central Bank have no role in setting of interest rates, I have previously stated that I expect firms to treat their customers fairly by passing on increases in deposit rates. I note that many providers have recently increased their deposit rates.

For borrowers, the Government is aware that the rising interest rate environment can pose challenges to some. The Deputy will be aware that on 31 August, I met with representatives from the retail banks, non-banks and other industry stakeholders including the Central Bank of Ireland, to discuss these challenges.

I also met representatives from the Money Advice Budgeting Service and the Insolvency Service of Ireland amid increased demand for their services.

I made it clear that banks and all other mortgage entities should be fully aware of the significant challenges that some of their customers are facing and, therefore, lenders and servicers should respond by assisting their customers who are experiencing difficulty.

I also highlighted that greater clarity should be provided to customers on the possibility of switching provider and this option should be fully supported by all mortgage entities, including the existing mortgage creditor as the level of switching between firms is low.

In addition I supported the steps taken by the Central Bank to ensure that firms proactively deal with emerging difficulties for their customers since the increase in interest rates. The Central Bank requires firms to enhance the range of supports available to borrowers in or facing arrears and to have sufficient operational capacity to manage applications by borrowers to switch their mortgage or mortgage provider.

It will now be necessary for the industry to demonstrate that they are delivering for borrowers in difficulty with supports and certainty, and developing long-term sustainable solutions for borrowers.

I would also encourage consumers to use the different tools available to see if they are getting the best possible value. on their financial product such as deposits or mortgages.

The Competition and Consumer Protection Commission's (CCPC) website includes a number of comparison tools to help consumers to make informed choices.