Cian O'Callaghan (Dublin Bay North, Social Democrats)
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26. To ask the Minister for Finance the action he is taking to reduce extremely high interest rates being charged to some mortgage holders whose mortgages were sold to financial institutions after the crash; and if he will make a statement on the matter. [27616/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB).

The ECB increased official interest rates over the course of 2022 and 2023 as it moved to combat excess inflation. However, since last summer it has now reduced official interest rates on seven occasions, most recently with effect from 23 April 2025. 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 2.10% in its main official lending rate to 2.40%.

The level of official interest rates will influence the overall level of interest rates throughout the economy. However, the determination and adjustment of retail and business lending rates are commercial decisions for individual creditors 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 fall 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 March and indicates that average mortgage rates were 54 basis points lower in annual terms.

In relation to outstanding mortgages, the latest available data is also for March 2025, and it also indicates that the average interest rate on all mortgages held by both banks and 'non-banks' also continued to decline from 3.67% and 4.51% at end March 2024 to 3.50% and 4.00% respectively at end March 2025.

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

Also, the mortgage industry has introduced several measures to support borrowers who wish and are in a position to switch their mortgage. This includes 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. 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 website, entitled 'it's in your interest', for borrowers to further encourage and assist mortgage switching. However, 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.

The Government is acutely aware of the impact that increased mortgage interest rates has had on borrowers over recent years, and as the Deputy is aware it has introduced a mortgage tax credit to assist borrowers who experienced an increase in interest rates. Furthermore, the Government also 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.

It is also worth noting that the Abhaile scheme, which is led by the Money Advice and Budgeting Service (MABS), is available to assist borrowers, and it will provide, without charge, independent money, budgeting and debt advice to households. This service can, if necessary, also provide advice and assistance on the personal insolvency options which may be available to help borrowers to restructure their mortgage.