TDs urged to bring in new cap on home loan rates
At least two political parties are prepared to bring in legislation to give the Central Bank powers to regulate variable mortgage rates.
The Fair Mortgage Rates Campaign, headed by Brendan Burgess, has asked political parties to outline their policies on mortgage rates ahead of the election.
It said around 300,000 borrowers were being overcharged by banks on variable mortgage rates, which are twice the average charged elsewhere in the Eurozone.
The number affected rises to around 500,000 people when the fact that most borrowers are couples is factored in, Mr Burgess said at a briefing for politicians.
But half of these are unable to switch, and would not benefit from new lenders entering the market.
"Some 150,000 borrowers can't switch because they have high loan-to-values, are in negative equity, or are in arrears," he said.
The campaign wants the law changed to stop banks charging lower variable rates to new customers compared with what they charge existing customers.
Both KBC Bank and Bank of Ireland charge far higher rates to existing customers who are trapped, Mr Burgess said.
Banks were accused of collectively making profits of €1bn a year from excessive mortgage rates.
The Fair Mortgage Rates Campaign has proposed legislative changes that would give powers to the Central Bank to limit variable rates to no more than 4pc above the European Central Bank, which is 0.05pc.
Fianna Fáil's Michael McGrath said his party was in favour of giving powers to the Central Bank to limit what could be charged. He added: "The Central Bank needs to start fulfilling its consumer protection role. It should not allow discrimination between new and existing borrowers."
Fine Gael TD Alan Farrell said new business rates should be available to all borrowers, but his party had no plans to legislate to cap mortgage rates.
Sinn Féin's Pearse Doherty said he was called into the office of former Central Bank governor Patrick Honohan when his party proposed giving the regulator legislative powers to limit variable rates.
He claimed he was told the Central Bank did not want this power. "Of course they do not want the powers. But they should be given it. We need a Central Bank that acts in the interests of consumers," he said.