Higher mortgage rates a ‘drag’ on economy, report finds

Higher than necessary mortgage rates for borrowers act as a “drag” on the economy but any interference with lenders risks damaging the long-term prospects of banks, an analysis by the Central Bank has concluded.

The report looked at the difference between the official ECB rate and what banks charge here for variable mortgages as well as the risks involved in regulating those charges.

The report, which discusses the cost of credit risk associated with lending and the cost of running a bank, concludes that lending rates depend on the cost of funds.