Former Minister of State at the Department of Finance and current Dublin MEP, Brian Hayes, is proposing a grand bargain between the ECB, the Government and the Irish Banks. The ‘Grand Bargain’ would involve introducing fixed rate mortgages at a fair price for homeowners and would help resolve the problem of tracker mortgages for Irish banks.
“Europe owes Ireland for the action we took during the crash that saved the Euro. The time is now right for the European Central Bank to step up to the plate and put things right. Helping us fix the mortgage problem is the one thing it can do. By taking the tracker loans from Irish banks on to its own balance sheet, the ECB can unlock this problem.”
“I believe leadership on the issue has to come from the highest levels of government and from the Irish Central Bank.”
“The ECB would be taking on a very low risk by taking tracker mortgages on to its balance sheet and of course it would have zero financing cost. I call this move a ‘Grand Bargain’. Removing tracker mortgages from the books of Irish banks would improve their profitability and free up capital for new lending to growing businesses creating new jobs.”
“Improving the profitability of Irish banks will in turn increase the value of the taxpayers’ shareholding in these banks. As part of the ‘Grand Bargain’, the banks should be obliged to agree that the interest rate on existing variable mortgages will be set at an agreed percentage above the ECB rate. Those on variable mortgages are not only paying for the sins of the banks, but they are holding back the economy because of depressed spending power. They are the group being fleeced by the banks. Having variable interest rates two percentage points higher than continental Europe is one of the biggest rip-offs in living memory.”
“International interest rates are now at historically low levels. It is possible for the banks to borrow 10-year money on the international markets or from the ECB at less than 2pc. In turn, 10-year fixed interest mortgages should be made available at 3.5pc or even less. That should be also part of the deal. Getting this right can unlock the pent-up demand that has for too long lain moribund in our struggling economy.”