Michael McGrath, Fianna Fáil’s finance spokesman, said last night that his new mortgages bill will tackle the“excessive” rates Irish banks are charging for home loans, even after some banks cut their standard variable rates last week.
The Central Bank Variable Rate Mortgages Bill 2016 — which Mr McGrath will table this evening in the Dáil — proposes to give the Central Bank powers to set a ceiling on the amount lenders can charge for standard variable mortgages.
The bill does not, however, explicitly set out what that ceiling should be, but it would be up to the regulator to intervene in the market.
Mr McGrath told the Irish Examiner that “the purpose of the legislation is to tackle what Fianna Fáil regards as excessive standard variable rates being charged to mortgage holders around the country”.
He said he believed the existence of the legislation would persuade lenders to drive rates closer to the rates charged across the rest of the eurozone.
Fianna Fáil believes that the bill will win widespread support in the Dáil.
A Fianna Fáil spokesman said the bill would be the first test of the new committees and would be scrutinised by the Central Bank, advisers from the mortgage industry, and consumer advocates.
The legislation was also aimed at helping to re- balance the powers of the Central Bank to boost the voice of consumers, the Fianna Fáil spokesman said.
It also plans to cover home loans acquired by equity funds or so-called vulture funds during the crisis.
The Central Bank has said that it does not want the powers and believes any intervention could dissuade new lenders from entering the mortgage market here.
However, the mortgages bill envisages that the Central Bank would intervene where it sees “a market failure”.
According to the bill, a “market failure shall mean a situation in which market conditions are such that a lender is, or lenders are, charging a variable interest rate or variable interest rates for principal dwelling house mortgage loans which are higher than the Central Bank considers can be reasonably and objectively justified by reference to the factors set out in section 3”.
“In setting a variable interest rate... a lender may not discriminate between existing borrowers and new borrowers,” the bill says.
Shares in Permanent TSB fell 3.5% yesterday. Its shares, which traded at 188c, are now down 59% since the start of the year.
Bank of Ireland shares were unchanged at 24c, down almost 30% this year.
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