Bill proposes giving powers to Central Bank on rates
Published 11/06/2015 | 02:30
The Central Bank would be given powers to limit what interest rates banks could charge on variable mortgages, under legislation proposed by Sinn Féin.
The proposed legislation would give the Central Bank new powers to set out the maximum rate of interest that any of the five domestic banks could charge.
The bill would seek to provide the Central Bank with powers to direct certain institutions to lower or cap mortgage interest rates, SF finance spokesperson Pearse Doherty said.
His bill proposes that the new powers would apply to the five main domestic lenders only.
This restriction would mean that a new entrant to the market would not be discouraged by fears that their rates might be subject to control.
The Private Members' legislation, the Central Bank (Mortgage Interest Rates) Bill 2015, is a response to what the party said were some of the highest rates in Europe, which are twice the eurozone average.
He said the measures proposed in the bill would allow the Central Bank to set a maximum rate of mortgage interest for an individual bank for a period not exceeding 12 months.
Sinn Féin has said the Government's response to high variable rates has not been adequate.
Some 300,000 mortgage holders are paying among the highest variable rates in the eurozone.
The high cost of variables works out at around €300 a month more than the cost for a similar-sized mortgage in the rest of the eurozone.
Finance Minister Michael Noonan has given the banks until July to start lowering their variable mortgage interest rates, or offer lower fixed rates.
He warned them he has the option of hiking the levy on them if they fail to reduce rates and said the Government could also enact legislation to give powers to the Central Bank to regulate rates.