21 March 2016
By David O’Sullivan
Cork South-West Fianna Fáil TD Margaret Murphy O’Mahony has said the party is not forgetting the plight of standard variable rate mortgage holders trapped on high interest rates and stuck in a vicious cycle because of negative equity and inaction from banks.
Deputy Murphy O’Mahony said: “Many families are feeling trapped and under huge strain because of their mortgage. I’ve met families who are stuck on high standard variable rates who haven’t seen any real action from banks or government to ease the pressure on them. Fianna Fáil is committed to real action on this and their plight will not be forgotten.
“A detailed look at the standard variable interest rates at the moment will show a family with a €200,000 mortgage is paying approximately €4,000 a year more in interest than a comparable borrower in Northern Ireland and in other European countries. This is huge issue for many families and action in this area would make a huge difference in their daily lives.
“Fianna Fáil’s plan is to give new powers to the Central Bank to intervene where the market is not applying fair interest rates to customers. These powers exist in other countries and unfortunately our banks have proven by their actions that they can’t be let decide these matters for themselves any longer.
“The legislation Fianna Fáil is proposing strikes the right balance between the banks’ need to make a profit and the borrowers’ rights to be treated in a fair manner.
“Our plan is to give the Central Bank the responsibility of monitoring the level of competition in the mortgage market and the rates being charged. It would then step in where an obvious unfairness is being applied. The Central Bank would be able to use with a range of tools, including interest rate caps, to influence the standard variable rates being charged.
“At the moment too much power still lies with the banks and government policy to date has been to try to persuade the banks to act more favourably towards customers on high variable interest rates. But that hasn’t worked for families in west Cork and across the country. In reality the banks have merely tinkered with their standard variable rates and offered new longer-term fixed products. This ignores the real issue.
“This is about addressing market failings and any reasonable assessment of the mortgage market now will tell you that’s it’s not functioning properly. It has been clear for some time that the Central Bank does not have all the tools it needs to ensure a properly functioning mortgage market. This will not be solved by greater competition in the banking sector alone; a more empowered Central Bank is needed too.”