Ireland's mortgage interest rates will likely remain among the highest in the eurozone if a proposed bill preventing banks from selling customers' homeloans without borrower approval is passed into law, a financial services representative group has said.
Latest Central Bank figures show Ireland to still have the second highest interest rate on new mortgages in the eurozone, at 3.03%. The average new mortgage rate in the eurozone is 1.77%. Only Greece has a higher rate than Ireland among countries which have the euro as their currency.
Sinn Féin unveiled its draft 'No Consent, No Sale' bill last month and the Central Bank has already warned government that the bill could prompt an increase in interest rates and lead to financial stability risks for the State.
Brokers Ireland has echoed those concerns on the back of the latest Central Bank figures, saying the bill would impact mortgage holders and prevent "much-needed" competition in the banking sector.
It said the recent narrowing of the mortgage rate gap between Ireland and the eurozone "could come to a halt" if Sinn Féin's bill, currently going through the Oireachtas, was passed into law.
“While we’re still 1.26% ahead of the euro area average, with less attractive long-term mortgage products by comparison with many of our European counterparts, it is important to acknowledge that there have been improvements over the last year or so," said Brokers Ireland director of financial services Rachel McGovern.
“While this message may be unpopular for politicians to articulate in an environment where the tracker mortgage scandal gets yet deeper, nonetheless, it is something we would implore them to consider very carefully, in the interest of mortgage holders and those wishing to get their first mortgages,” she said.
"In our view this bill is a step too far, it represents overzealous interference in the market that will have severe unintended consequences.”
Brokers Ireland said the vulture fund approach by lenders to dealing with the mortgage arrears crisis "may not have been the best one".
However, it said lenders having to seek written consent of borrowers before selling their mortgages - and to have documentation approved in advance by the Central Bank in each case - may not improve the situation.