Friday 28 October 2016

Central Bank will work 'to the letter and spirit' of new law to cap mortgage prices

Published 19/05/2016 | 18:33

The bank is known to be opposed to the law (Stock picture)
The bank is known to be opposed to the law (Stock picture)

The Central Bank will work to the letter and spirit of a new law giving it powers to cap mortgage prices, if it comes into law.

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The bank is known to be opposed to the law, but Central Bank Governor Philip Lane said it will be respected, if brought into effect.

"We don't think having legislative caps is the best way to ensure competition," Phillip Lane told reporters at a banking conference in Dublin. "(But) we will work not just to the spirit but to the letter of every law that comes in."

Fianna Fail’s proposed law, which is aimed at bringing the price of Irish home loans into line with the rest of the Eurozone passed through its first stage in the Dail this week.

At the same banking conference, Michael Noonan says he will call in the heads of all of the main banks to apply pressure to cut mortgage interest rates again, but stood over claims a move to legally force down prices could be unconstitutional.

Speaking ahead of a speech to an international banking conference in Dublin this afternoon, Michael Noonan said he is expecting State owned AIB to cut rates for homeowners further, as the bank's profitability boosts the lender resilience.

But, he said legislation pushed through the Dail this week by Fianna Fáil could be unconstitutional on a number of grounds, including that it interferes with the property rights of bank shareholders; includes no appeal mechanism and would apply retrospectively to mortgages issued in the past.

Competition between banks is now having an effect in driving down prices, he said.

The new legislation will also have to be considered by the European Central Bank in Frankfurt, because it applies directly to the work of the Central Bank here, he said.

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