Variable interest rates: Noonan to call in banks to discuss cuts
Published 27/04/2015 | 13:27
The Minister for Finance has revealed plans to call in six of the country's main mortgage lenders to discuss reducing variable interest rates.
Speaking in Limerick earlier Michael Noonan said the Governmor or the Central Bank is currently reviewing the cost of mortgages to banks.
"I've had consultations with the governor of the Central Bank and he has done a piece of analysis to show the margin between the cost of money and what they're getting for money when they lend it for mortgages, and he has that for me in the next 10 days or so.
The Minister is then expected to meet with the main lending institutions to discuss the report.
"I'm calling in the senior management of the six major lenders in the mortgage market in Ireland and I'll present them with the evidence from the Central Bank and I'll say look, we think you should reduce your interest rates, and we want to discuss it, and we want you to explain why you can't but we'd prefer if you did.
"So if you call that pressure, that's pressure but I'd see it as a discussion in the normal way, but I don't have legal authority to direct."
Meanwhile, the Minister for Finance has welcomed the initiative by Ulster Bank offering less well off mortgage holders already in arrears a chance to have debt written off.
The bank has written to 2,000 customers who are eligible for social housing and who have not engaged with the bank in relation to repayments and are already facing repossession.
The bank will also consider a debt write-off deal for other mortgage holders who do not qualify for social housing but it is understood this approach will be on a case-by-case basis.
The bank says it will “look sensitively” at what is reasonable for a customer to repay each month and if terms are agreed it will not seek to repossess homes.
If the home is sold and the borrower qualifies for social housing, Ulster Bank will not chase them for the residual debt.
Speaking in Limerick earlier the Minister for Finance said it was a welcome initiative.
"I thought it was a very interesting and from my point of view welcome initiative.
We're working at present on adding to the menu of options for the banks in their relationships with people with impaired mortgages."
"110,000 mortgages have been reconstructed using the menu of options there now and they've been satisfactorily reconstructed. but we know now that as you come down to the very difficult cases at the end, other options are necessary, and I welcome this initiative from Ulster Bank. It's another option and I hope it will work."
Minister Noonan said the government is planning to put other options on the table for the residue of the most "difficult cases".
"In the next couple of weeks the government, after consulation with the banks, will be putting additional options on the table to deal with the residue of the most difficult cases which haven't been resolved already."