Minister tells TD he has no statutory role in relation to PTSB mortgage interest rates

‘Lending institutions, including those in which state has shareholding, are independent commercial entities’
‘Not appropriate…to comment on or become involved in the detailed position of mortgage holders’

Sligo News File Online

Tony McLoughlin, TD, Fine Gael, Sligo-Leitrim
Tony McLoughlin, TD,
Fine Gael, Sligo-Leitrim

Finance Minister, Michael Noonan has said he has no statutory role in relation to regulated financial institutions passing on the European Central Bank interest rate change or to the interest rate charged on mortgages.

Responding to a written parliamentary question from Sligo-Leitrim Fine Gael TD, Tony McLoughlin who asked him “the reason the Permanent TSB Bank is allowed to continue to impose higher rates of interest on its Irish customers who have standard variable mortgages, in comparison with other European Banks, and the action he has taken to rectify this situation…”,  the Minister said the lending institutions in Ireland, including those in which the State has a significant shareholding, were “independent commercial entities.

“I have no statutory role in relation to regulated financial institutions passing on the European Central Bank interest rate change or to the mortgage interest rates charged.  It is a commercial matter for each institution concerned.  It is not appropriate for me, as Minister for Finance, to comment on or become involved in the detailed position of mortgage holders or the manner in which individual banks choose to put forward mortgage propositions to potential customers or how that relates to existing customers. 

“That said, the issue of regulation of interest rates remains a policy area under active review and this has been the subject of recent correspondence between the Department of Finance and the Central Bank. The current position is that the Central Bank does not have new proposals for the additional regulation of interest rates.

“The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations.

“It should be noted that The Governor of the Central Bank and I meet regularly. At a recent meeting on the 2nd April, among the items discussed was the issue of mortgage interest rates. The Governor provided an update on the ongoing work that he and his officials are carrying out on the issue of the standard variable rates charged by the lenders.

“The Governor and I noted that the SVRs charged in Ireland are higher than other euro area countries and have not fallen in line with ECB wholesale rates. The Central Bank will continue to research why this is the case and will publish results shortly.  The Governor will update me on progress in due course,” he concluded.