ECB says it can't investigate high mortgage rates
The European Central Bank says it can't investigate high variable mortgage rates in Ireland because it is beyond its mandate.
All 11 of Ireland's members of the European Parliament, led by Fine Gael MEP Brian Hayes, lent their signatures to a letter imploring ECB chief Mario Draghi to examine our high variable mortgage rates.
In their letter, the Irish MEPs said that some banks are still charging more than 4pc for a standard variable mortgage product, despite the fact that the ECB's main refinancing rates for banks is 0pc.
The MEPs asked the ECB to investigate why the six major players in our banking market are not passing the main ECB refinancing rate on to their customers when it comes to mortgages, but applying it to deposit savings rates.
However the chair of the ECB's Supervisory Board, Daniele Nouy, wrote to Mr Hayes yesterday. He said that an investigation by the ECB of whether banks pass on the main ECB refinancing rate (currently 0pc) to their borrowers is "not foreseen" as it would fall outside the ECB's mandate.
"To the extent that the issues raised are seen as related to sustained market-wide rent extraction, they would be a matter for competition authorities and/or market conduct authorities to investigate," said Ms Nouy.
The ECB also confirmed that it would have to be consulted on any proposals to legislate in the hugely controversial area.
This will include last month's Central Bank Variable Rate Mortgages Bill forced through by Fianna Fáil - despite the fact the Irish Central Bank does not want powers to regulate rates.
Last night, Mr Hayes said that the failure of the ECB to investigate was "at one level a complete abdication of responsibility by the ECB" as it sets interest rates for the euro area.
However Ms Nouy said that the six banks were charging "exceptionally low interest rates" to a substantial share of borrowers with tracker mortgages who are paying an average interest rate "considerably below" the average interest rate offered to new borrowers in the euro area.