Irish mortgage rates, the highest in Europe, will be part of the talks between Fianna Fáil and Fine Gael in their discussions on renewing their supply and confidence agreement, Davy analysts have said, after Fianna Fáil’s bid to force regulation over interest rates “run aground”.
“One of the first acts of the current Dáil was the tabling of a mortgage interest rate bill by Fianna Fáil, which would have given the CBI [the Central Bank] the power to review mortgage rates in Ireland and direct the reduction of rates where the CBI deemed rates to be elevated," wrote analysts Diarmaid Sheridan, Stephen Lyons, and Jack O’Halloran.
“The bill remains in committee stage, with the rate-setting element unlikely to be part of any finalised bill following criticism from the CBI, the ECB and the Competition and Consumer Protection Commission,” they wrote.
Numerous surveys show home loan rates and business loans for SMEs charged by Irish banks are the highest in the eurozone.
The Irish Examiner reported this month Italian banks charge an average 1.55% for loans to companies, way below rates banks here charge Irish SMEs. And Italian banks charge householders 2.21% for their mortgages, a third cheaper than the cheapest Irish home loan.
Irish banks have long argued they have higher cost of funds and legal risks, but consumer advocates point to crisis-hit Italy and its banks to question those arguments.
Davy said: “Capital requirements in Ireland are multiples of those in other European countries to reflect the severity of the fall in house prices and the level of default experienced post-2008.”