The Central Bank has told the Government in a high-profile report sent to the Department of Finance that it does not want the power to force banks to slash variable mortgage interest rates.
A spokesperson for the financial regulator confirmed the stance last night, leading to calls from struggling mortgage holders for the Coalition to ignore the recommendation and force officials to take on the role whether they want to or not.
Responding to an Irish Examiner report yesterday that the document will contradict political clamour and find that customers are not being “gouged”, a Central Bank said the body is “not seeking” mooted new laws to force banks to reduce fees.
The spokesperson said this view is included in the report, and will be backed up by evidence forcing what the Central Bank contends are unnatural rate cuts that could destabilise the banking sector.
The document was called for by Finance Minister Michael Noonan last month to back up calls to slash the rates, which have caused a political storm since Fianna Fáil revealed a failure to pass on ECB reductions by Irish institutions last month.
However, instead of supporting Government calls for new laws to force through the cuts and potentially hit banks in the upcoming budget if they do not comply, the document will state:
The report was sent to the Department of Finance yesterday afternoon. However, despite a Central Bank belief that it would be published this week, it may now not be released until after crunch department talks with banks next week.
A department spokesperson said that, as Mr Noonan is attending an EU finance meeting in Brussels and is not due back until this afternoon, it has no position.
Outgoing Central Bank governor Professor Patrick Honohan flagged the regulator’s stance a fortnight ago, saying that forcing through cuts could “choke off” competition and overall reform is needed instead of “somebody poking around” on isolated issues.
Irish Mortgage Holders Organisation director David Hall said the Government should order the Central Bank to take on the power and that 300,000 variable mortgage interest rate holders will see the stance as “an answer from a banker”.
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