The proposals would provide “additional consumer protection for variable rate mortgage holders”, the bank said.
The measures come after banks were severely criticised for the high rates they charge standard variable rate holders.
About half of all Irish mortgage borrowers are on tracker mortgage rates linked to the ECB rates and therefore benefit from the much lower costs at a time when ECB rates are close to zero, while standard variable rate borrowers pay substantially more.
Finance Minister Michael Noonan last summer told lenders to reduce their mortgage costs.
AIB, which is State- owned, sharply cut its variable rate. Other lenders offered fixed rate deals and switching incentives.
The Central Bank said that its proposals would mean:
- Mortgage banks would tell borrowers how they calculated their variable rates and how they set those rates;
- Lenders would provide information about other mortgage options;
- Banks would provide notice of plans to hike rates longer than the current period of 30 days.
“We believe there is scope for increasing the level of transparency of mortgage rates,” said Central Bank director of consumer protection Bernard Sheridan.
“Taking out a mortgage is one of the biggest decisions a consumer will make in their lives.”
Michael Dowling, the chair of the mortgage committee at the Irish Brokers’ Association, said he welcomed any plans to extend the notice period beyond the current 30 days.
However, the key issue of still-high variable mortgage interest rates remains, he said, while customers need “real price transparency” without having to switch to fixed rates or use “marketing incentives”, he said.
Brendan Burgess, representing the Fair Mortgage Rates Campaign, said the Central Bank “should scrap” its proposals.