Written answers
Tuesday, 22 October 2024
Department of Finance
Mortgage Interest Rates
Willie O'Dea (Limerick City, Fianna Fail)
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231. To ask the Minister for Finance what is being done to deal with the exorbitant interest rates being charged by vulture funds to mortgagees, which is causing a great deal of stress for many families; and if he will make a statement on the matter. [42449/24]
Jack Chambers (Dublin West, Fianna Fail)
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The Government recognises the difficulties that the increase in interest rates in recent years has caused for some mortgage borrowers. From a regulatory perspective the Central Bank has put in place a range of measures in order to protect consumers.
This framework seeks to ensure that 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. This consumer protection framework provides the same protections for borrowers regardless of the regulated entity with whom they are dealing, be that a bank, retail credit firm or credit servicing firm.
Specifically in relation to variable rate mortgage holders, the Central Bank's Consumer Protection Code requires all regulated mortgage creditors to explain to borrowers how their non-tracker variable interest rates have been set and to clearly identify the factors which may result in changes to variable interest rates.
The Central Bank has engaged intensively with regulated firms on the operation of specific aspects of the consumer protection framework. Arising from this engagement, the Central Bank has indicated that regulated firms:
• have enhanced the supports available to borrowers in or facing arrears;
• have sufficient operational capacity in place to manage applications by borrowers to switch their mortgage or mortgage provider, and that there is no discrimination against borrowers based on where they currently hold their mortgage; and
• that changes in mortgage interest rates are in line with mortgage terms and conditions, the published variable rate policy statements of the relevant firms and the regulatory framework for which the Central Bank is responsible.
Also, following engagement by Government with the Banking Payments Federation Ireland (BPFI) and the mortgage industry a number of measures were introduced in 2023 to support borrowers who wish and are in a position to switch their mortgage.
This included the provision of an aligned industry wide set of initial eligibility criteria to facilitate people switching their mortgage from a non-bank to a bank. In order to be eligible to switch under these guidelines, customers need to be making full capital and interest repayments on their mortgage and to meet other eligibility criteria.
More recently the BPFI has launched a new website, entitled 'it's in your interest', for borrowers to further encourage and assist mortgage switching. Of course, the decision on whether or not to provide credit in any particular case, or the amount of credit to provide, remains a commercial matter for an individual lender.
In addition, in light of the impact high interest rates continue to have on households Budget 2025 extended the mortgage interest tax relief for a further year. This extension means that the relief will also be made available to assist mortgage holders in respect of the increase in interest paid in 2024 over 2022.
Now that the ECB is reducing official interest rates, the Government expects all mortgage creditors to keep their lending rates under review and where mortgage rates had in the past increased in line with ECB increases they should now, in this new interest rate environment, also appropriately adjust downwards.
Also any person who is experiencing a repayment difficulty on their mortgage should contact their mortgage creditor to discuss the matter or also avail of the 'Abhaile' advice and assistance service available through MABS.
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