Fair Mortgage Rates Campaign seeks politicians support for cap on loan costs

A campaign group aiming to propel the high costs of mortgage rates up the election agenda was launched yesterday. It immediately won the broad support of two of the main opposition parties.

Fair Mortgage Rates Campaign seeks politicians support for cap on loan costs

The Fair Mortgage Rates Campaign led by consumer affairs expert Brendan Burgess wants to win over the commitment of politicians to help borrowers who are not free to switch to lower rates.

The Government last summer came under pressure over the very high level of standard variable rates the banks were charging customers at a time when the ECB was cutting key rates.

After meeting Finance Minister Michael Noonan, most of the lenders cut their variable rates or offered improved terms to switch to lower-price fixed rate loans.

However, Mr Burgess told a press briefing attended by representatives of the four largest parties that increased competition for mortgages will likely do little to benefit borrowers unable to switch lenders or unable to move to lower-priced loans offered by their existing banks.

The campaign wants all customers to have the right to benefit from lower-priced loans.

It also aims to have the Central Bank impose a cap on mortgage costs — set at a ceiling of 4% above the ECB rate — to help “the most vulnerable” customers who have high loan-to-value borrowings, as well as customers of lenders who are no longer taking new business.

Customers cannot switch because they have had some change in their financial circumstances in the recent past.

The Fair Mortgage group said there is nothing to stop banks, including lenders who bought loans amid the financial meltdown, from hiking interest rates.

“We need legislative change,” Mr Burgess said.

At a press briefing, a number of mortgage borrowers said they have been harshly treated by their lenders.

Mr Burgess said in many cases mortgages were deemed to be unsustainable or unaffordable only because of the high interest rates the lenders were charging customers.

The campaign group said that the banks here had still to cut home loan rates in line with the reductions of the ECB.

It said lenders in continental Europe appeared to take a more responsible attitude to their customers.

It also wants to encourage lenders to re-introduce tracker mortgage products.

Fine Gael TD Alan Farrell told the meeting he agreed that all customers with similar loan-to-value borrowings should be offered similar terms.

He said the aim was for Irish borrowers to avail of the same rates across the eurozone.

Fine Gael was considering adopting a pledge to introduce a common switching process for all mortgage customers across the State, the deputy said.

Fianna Fáil finance spokesperson Michael McGrath said that costly mortgages “should be a bigger political issue than it is” in the election campaign.

He said his party advocated giving the Central Bank powers to impose some sort of cap on mortgage rates, and would be open to framing primary legislation, if required.

Pearse Doherty, Sinn Féin finance spokesperson, said he favoured “empowering” the Central Bank to make sure that all mortgage customers were treated fairly.

An AIB spokeswoman said the bank had cut its variable mortgage rates.

Bank of Ireland said it had no comment to make.

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