Roderic O'Gorman (Dublin West, Green Party)
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274. To ask the Minister for Finance if there are regulatory measures that can be taken to address the failure of certain banks to pass on ECB interest rate cuts to customers; and if he will make a statement on the matter. [35801/25]

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 reduced official interest rates on eight occasions, the most recent of which came into effect from 11 June 2025. These monetary policy changes, taken together with a change to its operational framework for implementing monetary policy last September, have resulted in a reduction of 2.35% in its main official lending rate to 2.15%.

While changes in the level of official interest rates will feed through to the wider economy, it does not have a uniform impact. In a market economy the determination of retail and business lending rates are commercial decisions for individual creditors and other factors, such as the cost of wholesale and retail funds, risk appetite, contractual terms, creditor status, operational costs, expected return, competition and desired market segment, will also be relevant.

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. In this regard the transmission of monetary policy rate changes happens with long and variable lags. The Central Bank has indicated that this was true as rates were rising and it also notes that this is also the case as ECB policy rates move lower.

However, in general, recent Central Bank data indicates that the average interest rate on outstanding mortgages held by bank and ‘non-bank’ regulated entities has declined over the past year. This is welcome and, from a general perspective, 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. The Central Bank will continue to liaise with regulated entities on this matter.

The Central Bank has put in place a range of measures to protect consumers who have or who are taking out a mortgage.

Specifically in relation to non-tracker variable rate mortgages, the existing Central Bank 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 mortgage providers are required to issue an annual notification to variable rate mortgage holders and at fixed rate maturity for fixed rate holders, which among other items shows a summary of alternative mortgage products available from that provider.

Furthermore, under the revised Consumer Protection Code, which will come into force in March 2026, mortgage lenders will be required to include within these notifications a personalised euro savings estimate alongside each alternative mortgage refinancing option presented.

In addition, 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.

More recently the BPFI has launched a website, entitled 'it's in your interest', to further encourage and assist the mortgage switching process.

However, the decision on whether or not to provide new credit in any particular case, or the amount of credit to provide, remains a commercial matter for an individual lender.