Fine Gael MEP for Dublin, Brian Hayes, today (Monday) criticised the Central Bank of Ireland’s statistics for new mortgage business lending in Ireland following the publication of their monthly retail interest statistics.
“The Central Bank of Ireland says that the average rate for new mortgage business in Ireland is currently at 3.47%, but it is clear that the average standard variable rate which Irish banks are charging is closer to 4.5%.
“The ECB has reduced its rate to 0.05% in an effort to stimulate the Eurozone economy and mortgage lenders across the Eurozone have responded by reducing the mortgage rate to an average of 2.6%. Yet in Ireland, banks have gone in a different direction by charging excessive standard variable rates. Permanent TSB confirmed in the Oireachtas Committee earlier this week that their average variable rate is 4.30% while AIB and Bank of Ireland offer similar rates for their products.
“The Central Bank’s figures are being distorted because they are including restructured tracker mortgages as new business lending, despite the fact that tracker mortgages have not been issued since 2008. The interest rate charged on tracker mortgages is at an all-time low of 0.05%.
“Mario Draghi has informed me in a letter that these calculations are in accordance with ECB regulations but there seems to be a lack of understanding on the part of the ECB as to the specific nature of tracker mortgages and the number of them on the books of Irish banks.
“I am seeking a meeting with the ECB to explain the anomaly of the Central Bank’s calculation methods. The mortgage market is a daunting place for first-time buyers considering the Central Bank’s planned proposals for a 20% deposit, along with the excessive standard variable mortgage rates being offered.
“The ECB needs to take a proper look at the Irish mortgage market and examine the underlying issues. Irish mortgage holders are not paying a fair price that is consistent with current Eurozone market levels and I think the ECB as newly appointed supervisor of Ireland’s main banks need to take action on this.”