McGrath pushed to support new legislation to cap high variable mortgage rates ahead of the ECB hike

blank

Public Expenditure and Reform Secretary Michael McGrath has been urged to back a variable mortgage rate cap bill similar to the one he campaigned for when he was in opposition.

The bill is due to be presented by Labour’s Ged Nash in the Dáil today and comes just weeks before the European Central Bank (ECB) launches a round of rate hikes.

Around 200,000 mortgage holders in Ireland have variable rates and will face higher repayments when the ECB starts raising its lending rate.

Variable mortgage rates in Ireland are controversial because they are higher than in many other eurozone countries.

The legislation would give the central bank the power to force banks to lower their standard variable interest rates.

It would also give the regulator the power to prevent banks from offering better mortgage deals to new customers than are available to existing customers.

The Central Bank (Variable Rate Mortgages) Bill 2022 would require the central bank to conduct a quarterly assessment of the competitive landscape in the mortgage market.

This would look at variable interest rates, how easy it is to switch lenders, financing costs for lenders, and what interest rates they charge.

If regulators decide that there is a market failure because a lender overcharges a floating rate, it could set an interest rate to charge.

The legislation would also prohibit lenders from charging new customers lower rates than existing ones in order to win new business.

Mr Nash, who is spokesman for Labour’s Finance, said: “The string of interest rate hikes from the European Central Bank from July will hit nearly half a million hard-pressed homeowners who are already at the sharp end of the cost-of-living crisis.

“Ireland already has the second highest mortgage rates in the EU, surpassed only by Greece.

“That needs to change.”

He added that even at a time when borrowing costs for Irish lenders were low, Irish consumers were being hammered with variable rates on home loans, ranging from a high of 4.5 per cent to a low of 2.7 per cent.

“With interest rates rising, some analysts expect adjustable rate mortgage holders to pay up to €400 more a month here, even for a relatively modest €250,000 mortgage.

“The reality is that a young person or couple buying their first home will be stretched beyond their limits by these increases, while young families with mortgages for years to come will find their finances unsustainably stretched by rising interest rates .”

When Mr McGrath proposed a similar law while his party, Fianna Fáil, was in opposition, the then Attorney General pointed out that the law could be constitutionally challenged if enacted.

Mr McGrath’s bill was also rejected by the ECB and the Central Bank in Ireland.

A spokesman for Secretary McGrath said he had no comment.

Consumer advocate Brendan Burgess, who has long campaigned for lower variable interest rates, claimed Mr Nash’s bill was being quashed as it was again rejected by the ECB and the central bank.

He suggested replacing Mr Nash’s bill with a simple one that prohibits discrimination between new and existing customers.

https://www.independent.ie/business/personal-finance/property-mortgages/mcgrath-urged-to-back-new-bill-to-cap-high-variable-mortgage-rates-ahead-of-ecb-hike-41796814.html McGrath pushed to support new legislation to cap high variable mortgage rates ahead of the ECB hike

Fry Electronics Team

Fry Electronics.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@fry-electronics.com. The content will be deleted within 24 hours.

Related Articles

Back to top button