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Saturday 3 December 2016

Central Bank is 'delaying approval of new lender'

Published 20/05/2016 | 02:30

Brendan Burgess of the Fair Mortgage Campaign claimed regulators have constantly said competition was the solution to high variable rates. Photo: Frank McGrath
Brendan Burgess of the Fair Mortgage Campaign claimed regulators have constantly said competition was the solution to high variable rates. Photo: Frank McGrath

The Central Bank has been accused of hypocrisy for its failure to so far approve new lender Frank Money.

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Brendan Burgess of the Fair Mortgage Campaign claimed regulators have constantly said competition was the solution to high variable rates.

But he claimed the regulators had already taken seven months to authorise the new lender.

The new lender is awaiting approval from the Central Bank to enter the mortgage market, and will be targeting switchers and new borrowers once it gets authorisation.

Frank Money is aiming to have mortgage rates of 2.8pc - some 0.6pc lower than the new AIB variable rate, which will be the lowest in the market.

According to the Central Bank, the average variable rate for new buyers is 3.64pc currently.

This compares with an average rate of 2pc being charged by banks across the Eurozone.

For existing homeowners, the average variable rate being charged by banks here is 3.93pc.

Mr Burgess said a vulture fund could come in and buy a mortgage book and not be required to be authorised or licensed by the Central Bank.

"Yet Frank Money wants to introduce competition, which we all agree is needed, and the Central Bank has been sitting on the application for six to seven months," Mr Burgess said.

"If they were serious, they would have this sorted out in a couple of weeks.

"It is hypocritical of the Central Bank to say we need more competition in the mortgage market and yet delay approving a potential new entrant," he said.

There was no comment when the claims were put to the Central Bank.

Earlier this week, the Government avoided legislative defeat by not challenging to a vote the Fianna Fáil bill giving the Central Bank the power to regulate mortgage rates.

The Government did not press its amendment that the bill be referred to a pre-legislative stage. It now goes to committee stage.

Banking analysts now expect interest rates to fall. John Cronin, of Investec, said: "We expect further compression in mortgage rates over the course of the rest of 2016 and beyond."

Irish Independent

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