Central Bank out of touch with society - Mortgage interest rate regulation

DURING the boom years the Central Bank of Ireland had extensive powers of control over financial institutions which it failed to exercise properly or at all in the public interest. The result was the collapse of Anglo Irish Bank and the devastating consequences that flowed from that.

Now, the Central Bank has indicated it does not want increased powers to regulate mortgage interest rates in the public interest while, at the same time, planning to make permanent controversial loan-to-value and loan-to-income limits on mortgage lending introduced last year.

Last week, the Oireachtas Finance Committee commenced pre-legislative scrutiny of a Fianna Fáil bill to give extra powers to the Central Bank to cap excessive variable mortgage rates in the Irish market. When it was first introduced last May, Finance Minister Michael Noonan described it as unconstitutional and seriously flawed.