IBF defends banks' right to control mortgage rates

The Irish Banking Federation said today its members should retain the right to set interest rates for its standard variable rate mortgages.

It comes following a call from Financial Regulator Matthew Elderfield on banks to stop increasing interest rates on the mortgages, which around 200,000 people hold.

Mr Elderfield warned that if lenders continue the practice, it could prompt the introduction of new powers to impose restrictions on their rate setting ability.

However, IBF chief executive Pat Farrell has hit back at the Regulator, rejecting the assertion that banks are making the arrears crisis worse.

"What I'm saying is that it is in the banks' own self-interest to ensure that what they're doing in interest rates doesn't exasperate the situation for mortgage customers who are already in distress," he said.

"So I think we hear all those things, and take them on board, but I think ultimately banks should retain the ability to set interest rates."