Tom Brabazon (Dublin Bay North, Fianna Fail)
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419. To ask the Minister for Finance the engagement his Department has had with mortgage lenders regarding Irish mortgage rates, in light of the ECB cutting rates over the past nine months. [11813/25]

Pat Buckley (Cork East, Sinn Fein)
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420. To ask the Minister for Finance the reason ECB interest rate cuts are not being passed onto variable mortgage holders; and if he will make a statement on the matter. [11926/25]

Barry Heneghan (Dublin Bay North, Independent)
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422. To ask the Minister for Finance the reason mortgage lenders and the banks have maintained mortgage rates in the face of an interest rate environment where the ECB has cut rates six times in the past nine months; when the banks will cut their rates; and if he will make a statement on the matter. [11990/25]

Peadar Tóibín (Meath West, Aontú)
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423. To ask the Minister for Finance how many mortgage holders are paying an interest rate on home loans over 6% in Ireland; and if he will regulate vulture funds to prevent the issuing of such high mortgage interest rates. [12037/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 419, 420, 422 and 423 together.

The formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB).

As Deputies are aware, the ECB increased official interest rates over the course of 2022 and 2023 as it moved to combat excess inflation. However, it has now reduced official interest rates on six occasions, most recently with effect from 12 March. These recent monetary policy changes, taken together with a change to its operational framework for implementing monetary policy last September, have resulted in a reduction of 1.85% in its main official lending rate to 2.65%.

The level of official interest rates will influence the overall level of interest rates throughout the economy. However, in a market economy the determination and adjustment of retail and business lending rates are commercial decisions for individual lenders in line with the terms of the particular credit contract. Due to their particular contractual arrangements, most tracker mortgage borrowers will, as the ECB reductions work through the system, see their mortgage interest rate decline in line with the reduction in the main ECB lending rate.

However, in the case of other variable rate mortgages the pass through of monetary policy rate changes, either upwards or downwards, is less rigid than is the case with tracker mortgages and other commercial factors, such as the cost of wholesale and retail funds, risk appetite, operational costs, expected return, desired market segment will also be relevant. This will also be the case for fixed interest rate mortgages but, of course, the interest rate on such mortgages does not adjust until the end of the fixed rate period.

In overall terms Central Bank interest rate data indicates that, on average, retail mortgage rates have declined over the past year, but at a lower rate than the decline in official interest rates over comparable periods. In the case of new mortgages from credit institutions, the latest available data is for the end of January (and so will not take account of the more recent ECB rate reductions) and it indicates that average mortgage rates were 45 basis points lower in annual terms.

In relation to outstanding mortgages, the latest available data is for end 2024, and it also indicates that the average interest rate on all mortgages held by both banks and non-banks also declined over the course of 2024.

Regarding the distribution of mortgage interest rates, there is a wide variation in the interest rate distribution of mortgages held by banks, ‘lending non-banks’ and ‘non-lending non-banks’. According to the Central Bank’s ‘Frontier Statistics’ publication on the distribution of mortgage interest rates, as of June 2024, 1.58% of mortgages held by banks, 5.45% of those held by ‘lending non-banks’ and 29.03% of those held by ‘non-lending non-banks’ had, at that time, an interest rate greater than 6%.

The Central Bank has put in place a range of measures in order to protect consumers who have or who are taking out a mortgage. The consumer protection framework, which applies in the same way to all regulated mortgage entities such as banks, retail credit firms and credit servicing firms, 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.

Specifically in relation to non-tracker variable rate mortgages, 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 indicated that, as policy rates are now decreasing, it expects to see that all regulated firms make variable rate adjustment decisions in line with the relevant terms and conditions of mortgage contracts and the regulated firms’ published variable rate policy statements required under the Consumer Protection Code.

The Government is acutely aware of the impact that increased mortgage interest rates has had on borrowers over recent years. Therefore, it expects all mortgage creditors to act in the best interests of their customers and, now that official interest rates are declining, to keep their lending rates under review.

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. My Department will continue to liaise closely with the Central Bank, as regulator of the financial services sector and the industry, on this issue.