Fianna Fáil last night pledged to reintroduce a bill in the Dáil “at the first opportunity” that it says will swiftly lead to Irish banks slashing their home loan rates.
Finance spokesman Michael McGrath told the Irish Examiner he will table legislation “within weeks” to give the Central Bank extensive powers to persuade lenders to cut their standard variable mortgage rates.
“We will introduce legislation at the first opportunity,” Mr McGrath said.
A majority of TDs would support imposing some sort of controls on mortgage interest rates because Irish lenders were charging “excessive rates”, he said, adding that the legislation could be on the statute book in a relatively short time.
Separately, Fine Gael yesterday promised that a new incoming administration would help people struggling to buy a home by introducing tax breaks.
Finance Minister Michael Noonan said the move is one of a number of options his department will consider in the coming weeks, if they are put forward by the cross-party housing committee in a bid to solve the escalating housing crisis.
Mr Noonan said that while builders and developers are seeking Vat construction cost cuts, he may prefer tax breaks for those in need.
He said any measure could be similar to a previous home extensions initiative.
Mr Noonan said it could help families meet strict Central Bank mortgage rules.
The agreement Fianna Fáil struck to lend support to a minority Fine Gael-led government included a commitment to tackle high variable mortgage rates.
The commitment, however, by Mr McGrath to speed up the introduction of new legislation means there is likely to be swift progress over home loan rates, the highest in the eurozone.
The Central Bank has long said it does not have the power to apply a ceiling to mortgage rates, or indeed want such powers.
However, any move to regulate standard variable mortgage rates will not be universally welcomed.
Central Bank governor Philip Lane told reporters last week imposing a rates ceiling was “a very crude instrument which has many downsides”. The bank is worried any controls will discourage new lenders entering the mortgage market.
One senior market source said new entrants were likely to shy away from a country where rates are set by politicians.
Many campaigners have argued, however, that Irish homeowners are being fleeced.
About half of the 746,600 residential mortgage accounts in the Republic are on tracker rates pegged to rock-bottom ECB rates.
That leaves tens of thousands of householders paying relatively high standard variable or fixed rates.
Brendan Burgess of the Fair Mortgage Rates Campaign said the structure of the Irish mortgage market was already “highly dysfunctional”.
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