Charlie Weston: 'New rules will introduce some much-needed bank transparency'

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January 03 2019 02:30 AM

The new mortgage rules which have come into effect may be well short of what many campaigners have called for, but they will be welcomed all the same.

The changes will put some manners on banks.

From now on, lenders will have to tell customers if they can make savings on their mortgages. Lenders will have to let variable rate mortgage customers know every year whether or not they can move to a cheaper interest rate.

And the changes to the Consumer Protection Code will mean consumers on a variable rate mortgage will have to be told every year by their lender if they could get a cheaper interest rate due to changes in their loan-to-value ratio.

This comes in the context of a situation in which banks have long been accused of fleecing mortgage holders with the highest interest rates in the eurozone.

No wonder ECB president Mario Draghi blamed a "quasi-monopoly" among banks here for the high rates. AIB and Bank of Ireland dominate the market.

That is why the likes of consumer advocate Brendan Burgess have long advocated a cap on variable rates.

Fianna Fáil is making a renewed effort to get its bill to give the Central Bank powers to control mortgage rates passed. The Central Bank does not want powers to control rates. Whether that bill ever becomes law remains to be seen.

In the meantime, some transparency is being introduced into the market by the latest rule changes. If people are being overcharged it will now have to be pointed out to them by their lender, with options for how to change the situation outlined.

Now the onus will be on mortgage holders who are paying too much to act to get a better deal.

It is not as good as banks being forced to cut rates, but it should help.