Mortgage borrowers are protected by code from cash-back incentives,  regulator insists  

Brokers have called on the Central Bank to investigate cashback mortgages that mislead first-time buyers

The Central Bank said that on products offering incentives, including cash-back mortgages, that the existing code 'contains an important transparency provision'

The Central Bank has reiterated its consumer protection code gives sufficient protection for consumers buying mortgages when banks offer cash-back incentives. 

Mortgage brokers and researchers have long suspected that banks are effectively distorting competition by misleading first-time buyers, in particular, by offering cash-back incentives that mask the huge costs borrowers will pay over the lifetime of their loans. 

Brokers have said the Central Bank and the competition commission should investigate cashback mortgages because, they say, lenders that compete solely on providing the most competitive loan rates will be squeezed further, as the banking market consolidates with the departure of Ulster Bank from the Republic.                                     

However, the Central Bank said that on products offering incentives, including cash-back mortgages, that the existing code "contains an important transparency provision to ensure that consumers have sufficient clarity about the precise nature and scale of the benefit of an incentive to them, including the potential impact of an associated incentive on the cost of their mortgage".

The Central Bank on Monday set out its priorities for the year in protecting consumers and investors from harm. "Firms need to be mindful of the risks to consumers that arise in these uncertain times," it said.