Cathy Bennett (Cavan-Monaghan, Sinn Fein)
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126. To ask the Minister for Finance his proposals to protect mortgage holders from high interest rates. [39380/25]

Cian O'Callaghan (Dublin Bay North, Social Democrats)
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137. To ask the Minister for Finance the action his Department is taking to reduce extremely high interest rates being charged to some mortgage holders whose mortgages were sold to non-bank lenders after the economic crash; and if he will make a statement on the matter. [39363/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 126 and 137 together.

The formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB). Since mid-2024, the ECB has reduced its main lending rate from 4.5% to 2.15%.

While changes by the ECB generally have a direct impact on tracker mortgage rates, reductions by the ECB are only one factor that feeds into the commercial decisions made by creditors in relation to other lending rates. Other factors include the cost of wholesale and retail funds, risk levels, contractual terms, creditor status, operational costs, and market competition. As a result, mortgage interest rates can vary across creditors and customers.

Central Bank data indicates that mortgage interest rates have declined over the past year. At the end of March, the average interest rate on outstanding mortgages held by banks was 3.50%, down from 3.67% a year earlier. For the non-bank sector, the average was 4.00% down over half a percent from 4.51% a year earlier. For those entities in the non-bank sector which do not engage in new lending, the average was 4.57%, down almost one percent from 5.55% a year earlier.

These reductions are welcome, and it is expected all mortgage creditors will continue to keep their lending rates under review.

To assist borrowers who have seen large interest rate increases, the Government has introduced a Mortgage Interest Tax Credit for homeowners with an outstanding mortgage balance on their primary dwelling house of between €80,000 and €500,000. This applies for both 2024 and 2025.

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. Mortgage providers are also required to issue periodic notifications showing alternative mortgage products available.

In addition, the mortgage industry has put in place measures to assist customers, including the provision of an aligned industry-wide set of initial eligibility criteria to facilitate switching mortgages from a non-bank to a bank and a website, entitled 'it's in your interest', to further encourage and assist the mortgage switching process.