Dáil Éireann Debate, Tuesday - 18 April 2023
379. Deputy Fergus O'Dowd asked the Minister for Finance if mortgage applicants can be protected by rising interest rates following initial mortgage agreements (details supplied); and if he will make a statement on the matter. [17065/23]
View answerThe formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB). In line with its objective to reduce the level of inflation to its long-term target, the ECB has increased official interest rates on six occasions by a total of 3.5% since the summer.
This has impacted on the general level of interest rates in all countries that use the euro, including the wholesale cost of funds of banks and other mortgage creditors and the level of retail mortgage and other loan rates.
However, within the framework of monetary policy as determined by the ECB, it is then a commercial decision of each lender to determine its own lending rates. Therefore, any decision taken by individual mortgage creditors in relation to setting or changing of interest rates is, subject to compliance with the terms of individual mortgage contracts, a commercial matter for those creditors.
Also the period of time in respect of which a mortgage approval applies and/or the period of time that an offer of a particular fixed interest rate applies, is also a commercial decision for an individual mortgage lender. These mortgage creditors are independent, commercial entities and neither the Central Bank nor I have a role or function in such matters.
Nevertheless, as independent regulator, the Central Bank has indicated that it expects all regulated firms to take a consumer-focused approach and to act in their customers’ best interests at all times. In this regard the consumer protection framework seeks to ensure that lenders are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle, for example, through protections at the initial marketing/advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties.
The requirements put in place by the Central Bank complement the European legislative framework, including the Consumer Mortgage Credit Agreements Regulations (the ‘Mortgage Credit Regulations’).
If a consumer is not satisfied with how a regulated firm is dealing with him/her in relation to the handling of his/her mortgage, or the consumer believes that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, he/she should make a complaint directly to the regulated firm.
If the consumer is still not satisfied with the response from the regulated firm, he/she can refer the complaint to the Financial Services and Pensions Ombudsman (FSPO).
