Taoiseach warns lenders on rate cuts

THE TAOISEACH has challenged banks which are withholding mortgage interest rate reductions, saying the Government is open to introducing legislation on the issue.

Enda Kenny said he did not think it was “fair at all that a bank, because it priced itself in a particular way on tracker mortgages, should assume it can make up for a shortfall there by increases that are causing serious trouble for persons on variable rate mortgages”.

He said that Financial Regulator Matthew Elderfield had said quite clearly some time ago that he might well seek the Government’s support if he was having difficulty with banks passing on interest rate reductions.

Mr Kenny added that if Mr Elderfield came to the Government, he would “certainly be prepared to engage with him with a view to increasing his powers to deal with this matter effectively”.

Fianna Fáil leader Micheál Martin said Minister for Finance Michael Noonan had stated that the banks should pass on the interest rate cut to tracker mortgage customers and those holding variable rate mortgages. The Central Bank had also put pressure on lenders to pass on the cut. However, tens of thousands of variable rate mortgage holders still did not know whether their lenders would pass on the cut.

“Some banks already have indicated they will do so but others have indicated clearly the opposite,” he added.

Mr Martin said he was extremely surprised the Taoiseach had no legislation prepared and that, clearly, no work had been undertaken in recent weeks or months to prepare it.

“The Taoiseach said clearly that he would consider the introduction of legislation to force the banks to pass on these interest rate reductions,” he added. “The banks will not believe anything the Taoiseach says until they see the legislation published and that he and the Oireachtas mean business.”

He warned that otherwise the banks would be “thumbing their noses at the Taoiseach and at the thousands of mortgage holders across the length and breadth of the country”.

Mr Kenny said the valid proposals of some groups had not been included in the recent Keane report on mortgage difficulties.

“It is important, if we are to implement a package for mortgage holders, in so far as we can, that it be as inclusive as possible. Central to that is the very complex legislation that deals with personal insolvency.”

Mr Kenny said any legislation would be to enhance the regulator’s powers and his authority.

Sinn Féin leader Gerry Adams said Mr Kenny’s response was “watery”. A leading mortgage holder, National Irish Bank, was defying the Government by pressing ahead with a 1 percentage point increase in its variable home loan rate.

Mr Kenny said the regulator was completely independent and his job was to regulate and oversee a level playing pitch in respect of the banks. He would not introduce legislation until the regulator told the Government that he had a problem. A previous regulator had said the banks were adequately capitalised and the then government had gone along with that, Mr Kenny added.