Labour to support mortgage rates bill
The bill, being proposed by Fianna Fáil’s finance spokesman Michael McGrath, is designed to give the Central Bank new powers to reduce monthly repayments for many of the 300,000 households paying variable interest on their loans.
Last night, Labour’s Cork East TD Seán Sherlock said the party was supporting the proposed measure “in the spirit of the new dispensation that exists in Dáil Éireann”. He noted Labour believed the bill was worthy of “further discussion at committee stage”.
Sinn Féin has said it, too, will support the passage of the bill.
In a statement yesterday, however, Mr Noonan said there are three major flaws in the bill as presented.
“Some of the provisions appear unconstitutional. Secondly, with provisions like these the European Central Bank will need to be consulted before legislation could be enacted.
“Finally, the Central Bank Governor [and his predecessor] has stated they do not wish to regulate interest rates,” Mr Noonan said.
“As an independent body, even if the Central Bank were given the power to regulate interest rates, they could not be required to exercise this power. For these reasons, and to assess other unintended consequences, I consider it essential that this bill goes through pre-legislative scrutiny.”
However, Mr McGrath rejected the claim that parts of the bill are in conflict with the Constitution.
“This is the same bill we debated last July and was given to the Attorney General,” Mr McGrath said. “At no stage have any concerns about it falling foul of the Constitution been raised.”
He is due tonight to introduce legislation in the Dáil to comprehensively deal with the ongoing issue of banks charging customers unfair and unjustified standard variable mortgage rates.
“Under the terms of the legislation, the Central Bank would be required to carry out an assessment of the state of the mortgage market, taking into account factors such as the banks’ cost of funds, reasonable profit expectation, concentration within the market, the ease with which borrowers can switch mortgages between lenders and extent to which they are switching,” said Mr McGrath.
“Should the Central Bank conclude that a market failure exists, the legislation empowers them with a range of tools to influence the standard variable rates charged.”
The Cork South Central TD said the banks have to be forced to stop their practice of hammering customers without justification.
“We believe the government should allow the bill to go through to committee stage. This would allow a line by line examination of the bill,” he added.
Defending the bill, Mr Sherlock said: “The spirit of the bill is well-intentioned in that it seeks to speak for those people who are tied into variable interest rates who bought houses at the top of the market and now find themselves paying over the odds for their mortgages.”
