Tuesday 27 September 2016

Housing: Pressure on banks to slash their loan rates

Published 04/05/2016 | 02:30

The deal between the two main parties pledges to 'take all the necessary action to tackle high variable interest rates.' Stock image
The deal between the two main parties pledges to 'take all the necessary action to tackle high variable interest rates.' Stock image

The country's pillar banks will come under increased pressure to slash variable rates, according to the new document agreed between Fine Gael and Fianna Fáil.

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While scant on detail, the deal pledges to "take all the necessary action to tackle high variable interest rates". But there is no mention of legislation being introduced to force banks to slash rates.

The deal between the two main parties also outlines an agreement to provide greater protections for the family home, and for mortgage holders, tenants and small businesses from so-called vulture funds.

All options will be examined for "increased credit availability" and greater competition within the banking sector, the agreement says.

One of the most concrete measures agreed between the two parties relates to the rental sector, and the decision to increase rent supplement and the housing assistance payment (HAP) by 15pc .

The decision came following robust exchanges between Fine Gael ministers and Fianna Fáil negotiator Barry Cowen.

Mr Cowen argued that the move should be in place for around six months - but Fine Gael said advice from the Department of Finance suggested any such move would see landlords jack up rent.

But the issue of providing greater protections for mortgage holders has taken up a huge chunk of the government formation talks.

Fianna Fáil's finance spokesperson Michael McGrath is believed to have argued strongly for the need to tackle variable rates, which are out of line with those in other countries.

As reported by the Irish Independent on Saturday, many banks are considering a cut on rates - but are waiting for talks aimed at government formation to conclude.

However, the lack of a commitment for legislation will come as a disappointment.

Separately, Independent TDs involved in talks with Fine Gael last night said there was agreement to provide more "breathing space" for those in arrears.

Sources involved in the talks said that Finance Minister Michael Noonan spoke favourably about the prospect of introducing a "moratorium" aimed at those struggling with mortgage debt.

The proposal, which was argued for by Independent TD Michael Fitzmaurice, would see families in arrears given a further opportunity to engage with mortgage experts before banks can issue legal proceedings.

Irish Independent

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