Banks’ veto on mortgage deals ‘to be diluted’
Separately, Mr Noonan will also examine research on mortgage costs next week which he is expected to then use to push bank bosses into reducing their interest rates for borrowers.
The developments comes as the Coalition’s long-awaited measures to help those with unsustainable mortgage arrears is also set to be decided next week.
Mr Noonan signalled to Fianna Fáil’s Michael McGrath in the Dáil yesterday that amendments to the Insolvency Act would include taking the power to restructure a mortgage out of a bank’s hands.
He said that there were “new options, one of which is to amend the insolvency Act so that something along the lines of what the deputy has suggested can be put in place”.
Under changes being finalised by the Department of Justice, courts would overrule bank vetoes and impose new proposals from independent bodies, such as insolvency practitioners.
Mr Noonan also confirmed that an expanded version of the mortgage-to-rent scheme, as revealed by the Irish Examiner this week, is also being finalised for borrowers. This will see a threshold on home values lifted so more borrowers can apply and stay in their homes.
Mr McGrath pointed out yesterday that there had been 100,000 mortgage restructurings with banks but there were also 110,000 accounts still in arrears.
Separately, Mr Noonan confirmed he will review Central Bank research next week on the margin above the cost of money that institutions are imposing for variable rate mortgages.
This will examine the profits on mortgage rates being made by AIB, Bank of Ireland, Permanent TSB, Ulster Bank, KBC and ACC.
Lenders are currently charging double the eurozone average for variable mortgages, which is costing families thousands of euro more a year here.
Mr McGrath pointed out that a relatively small rate cut would result in huge savings and increased spending in the economy.
“A 1% cut in standard variable rates across the board would put about €400m into the pockets of mortgage holders throughout the country, or 300,000 families,” he said.
The research will be handed over next week and Mr Noonan said he would meet the six bank bosses by mid-May. He also said he had no problem forcing banks to act.
“However, if the Central Bank proposed to me that it should get control of the regulation of interest rates, I would legislate for that,” he said.
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