Fianna Fáil has announced that its forthcoming General Election manifesto will include a commitment to legislate to introduce protection for variable rate customers.
This issue has been the subject of intense public debate since Fianna Fáil tabled a private members Dáil motion on the subject last March. A family with a €200,000 mortgage is currently paying approximately €4,000 a year more in interest than a comparable borrower in Northern Ireland and in other European countries.
Earlier this week, a poll by the “One Big Switch” campaign found that over half of respondents agreed that high mortgage rates would be a key factor in deciding how they will vote in the forthcoming general election.
Party Finance spokesperson Michael McGrath commented, “Over recent months, banks have tinkered with fixed rates but there have only been very limited reductions in standard variable rates. The issue has not and will not be solved by competition alone. Just 712 mortgage customers have managed to switch their mortgage to date in 2015. Banks like to give the impression that they are willing to take on the mortgages of the customers of other institutions but in reality very few switcher mortgages are ever actually completed.
“The Central Bank’s proposed protection measures for variable rate mortgage holders published in November are totally inadequate as they focus on how banks would have to justify future rate increases. This is of no help whatsoever to existing mortgage holders who are already paying twice the rate being charged in other Eurozone countries. This is the reason why the Fianna Fáil election manifesto will include a firm commitment to enact legislation on this matter.
“The legislation we are proposing is balanced between the obvious need for banks to be profitable and the rights of consumers to be treated fairly. The Central Bank would be given responsibility for monitoring the level of competition in the mortgage market and the fairness of rates charged. This would act as a strong deterrent to banks from charging excessive rates and would only necessitate Central Bank action where the evidence points to a clear market failure. It would empower the Central Bank with a range of tools, including interest rate caps, to influence the standard variable rates charged.
“Such interest rates caps already apply in Ireland in respect of credit union loans and moneylenders. Given that a mortgage is the biggest financial commitment most people enter into during their lives, there is an even stronger case for the Central Bank to have the power to set a maximum rate. This also occurs in other European countries. Variable rate customers have waited long enough for action on this issue. Now is the time to act on their concerns. Fianna Fáil is committed to doing so.”