FF Private Member Motion on high mortgage rates

Brendan Burgess

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The following private member's bill will be discussed in the Dáil on Tuesday and Wednesday

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Press statement

FF Dáil motion will demand action to end standard rate mortgage rip-off
Number one issue affecting thousands of household budgets – McGrath



Fianna Fáil Finance spokesperson Michael McGrath has today published the details of a Private Member Motion to be debated in the Dáil next week which will demand action to end what he is describing as the rip-off of tens of thousands of existing variable mortgage customers. Earlier this week Fianna Fáil published an analysis of the interest rates that are charged to existing customers on tracker rates, standard variable rates (SVRs) and those that are available to new customers. This showed a wide and growing disparity with existing customers on SVRs very much at the bottom of the pile.

Deputy McGrath commented “There are at least 300,000 households who are on standard variable rate mortgages. These families have benefited least from the current low interest rate environment in Europe. In fact they have watched in absolute frustration as their mortgage rates have steadily risen as rates generally have fallen. In essence they have been trapped in a situation which is costing them hundreds of euro a month. It is the number one issue affecting their household budget yet receives little or no attention from government.

“Our Dáil motion is three pronged. We want the government to engage directly with banks, particularly the state owned banks to emphasise to them the seriousness of the situation. The Government also need to play an active role in defining what a competitive banking landscape would look like in Ireland by publishing a white paper on the subject. Seven years on from the onset of the crisis our banks may be stabilised but we are a long way from a normal banking system.

“Secondly we want the Central Bank to step up to the plate and take a much more hands on role in consumer protection. Last year Governor Honohan implicitly accepted that mortgage rates for existing variable rate customers were going in the wrong direction in the context of record low ECB rates stating “It is reasonable to ask whether, having under-priced lending so badly in the early years of the millennium, they could end up over-pricing it now.” A peer review of the Irish Central Bank published this week indicated that the Central Bank needed to do more to protect the interests of consumers. Action in respect of existing variable rate customers would be a good point from which to start.
“Finally we believe the banks need to reflect on the reputational damage they are making to their own brands by treating a large group of their own customers in a discriminatory manner. They can address this by extending recent variable rate cuts for new customers to existing mortgage holders and also by improving their product innovation and making a greater range of switcher mortgage products available,” concluded Deputy McGrath.
 
Populist guff from Fianna Fail. Mortgages in Ireland are effectively unsecured loans because in the best case scenario for a Bank it takes years to realise security. The only surprising aspect of mortgage rates in Ireland is that they are not higher. We need to face up to the fact in this country that if you fail to honour a loan contract, the lender has the right to enforce the penalties set out in that contract.
 
I would like to congratule Michael mcGrath for putting down this motion.It is about time politicians started to do something about the appalling rip off of SVR customers.We should forget about water charges and really protest about what the banks are doing to SVR consumers.
 
Are we as a country prepared to do a trade off in changing the law or the constitution in order to make it a lot easier to repossess a property and in return a lower mortgage rate. We are not going to see competition in the market with the situation that currently exists. Until a politician takes a hard nosed view of the causes behind the interest rate situation I will see their mutterings as populist guff. The next thing we will have a politician supporting the "Gorse Hill" trespassers.
I totally agree that it is wrong that that both old and new mortgage holders who are paying approximately 2% above what the mortgage should be having to do this but the cost of repossession/loss of mortgage income over a lot of years is a major factor in the higher interest rate. Not wishing to attack Michael Mcgrath in particular but even if there was a proposal to change the law in return for a reduction in rates there would be a huge amount of politicians wanting to keep them as separate issues. So populism = reduce mortgages but continue the status quo on repossessions.
 
I have to agree with what is being said above. Irish property holders seem to want the best of all worlds - protection of the court in the event they cannot make repayments, and low interest rates for everyone.

Personally, I would be happy with a quicker repossessions and lower interest rates, but that is simply my preference.

I wonder how many people would sign up for a mortgage at a 2% interest rate (LTV <80%) but one of the conditions was that you had to vacate the property in the event that you went more than 90 days in arrears ? And the courts enforced this rule without exception ?
 
No doubt the slowness of Repossessions means Banks can load good payers with exhorbitnt rates on the simple premise of, why would a new lender arrive, if he did arrive that would give competition and force rates down to a reasonable figure for the good payers.
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No doubt FF is using a bit of populism , but in fairness the SVR rates are thievery, so they are correct to raise it.
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I am not now so sure Politicians are still so anti-repo. They accept there are those who can pay yet won,t pay. They accept the need to sort the won,t ever be able to pay.
I think the O Donnell case (Gorse Hill) has taken some of the sting out of distrust of Banks.(no mean achievement)
Buy -to -Lets have two-thirds of arrears ,so maybe a sorting of them 1st would lead to a realisation that Homes are next.
I have a feeling that quite a few of the Banks are finally getting their act together in sorting things.
I have a feeling that where possible most Banks are being responsible/reasonable.
I hope I am correct?
 
Guys

Read the Posting Guidelines

Don't attack other posters - Disagree with their arguments by all means.

I have removed the personalised discussions.

Brendan
 
Michael McGrath and Brian Hayes were on Matt Cooper just now. They more or less agreed with each other, which was very odd indeed.

Brendan
 
Delboy.

There is a perception that a lack of Repos = higher SVR,s.
I have not heard a Bank use lack of Repos as a bona-fide reason to hit current customers.
I wonder if it is legal to penalise good payers on the back of bad payers.
I can understand increasing rates on New Mortgages but I wonder is it legal for any lender to get away with penalizing the good payers?

I do believe we need more Repos; maybe all we disagree on is the mechanics on this.

If you were a good payer and had to pay an extra2% you too would have {passion}
ps . I have no mortgage.
 
Having listened to Liam Twomey on behalf of Government on Prime time this eve I detected no urgency on pushing for reduction in SVR . "We have been busy saving the banks and dealing with repossessions ......we will be bringing in measures....but Miriam stopped him from digressing. We will have to look at this .....later .... So no urgency I fear.
 
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Very poor performance by the Govt spokesperson, Liam Twomey, on Prime Time last night. Fair play to Michael McGrath for raising this. I don't care if it is populist. I have written to all my local TD's and each of the Leaders of the parties about this issue (we are stuck on an SVR on both our main property and a buy-to-let).
We are too busy working to pay our mortgage to go out on the streets to protest - but we do have time to vote!!
 
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Very poor performance by the Govt spokesperson on Prime Time last night. Fair play to Michael McGrath for raising this. I don't care if it is populist. I have written to all my local TD's and each of the Leaders of the parties about this issue (we are stuck on an SVR on both our main property and a buy-to-let).
We are too busy working to pay our mortgage to go out on the streets to protest - but we do have time to vote!!
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Well put .
It was not so much a poor performance as a performance of a party who know this SVR issue is a Voters issue,
I suggest that those on SVR,s are those that Vote, unlike in my opinion a lot of the Water/Austerity citizens..
Government Td,s now know that the soft words on Rates by An Taoiseach etc won,t cut much ice on voting day, they also know that hand wringing that something must be done , means thin-ice(for them!)
 
Well done Michael McGrath!
Bill Twomey was terrible on Prime Time
I too have written to my TD and got a " we cannot interfere with the banks" reply from Michael Noonan himself
I am so despondent and angry at this stage
SallyM like you I have a SVR on our main property and buy to let
The last 5/6 years have been horrendous - I wont forget at election time either!
 
A great performance by Michael McGrath last night.As Brendan said the more people that contact their T.D. 's the better.Fine Gael will smell the coffee when they realise there is a lot of votes hinging on this issue.Lets all keep the pressure on.
 
Mortgages in Ireland are effectively unsecured loans because in the best case scenario for a Bank it takes years to realise security. The only surprising aspect of mortgage rates in Ireland is that they are not higher. We need to face up to the fact in this country that if you fail to honour a loan contract, the lender has the right to enforce the penalties set out in that contract.
This is classic flak - nonsense injected into a debate to divert attention from its main thrust, and it is applied especially frequently in this discussion.
It would be very unsurprising if banks and their pr agents did not attempt such a strategy in the current debate, since they have precious little by way of a rational defence of their position, which thus far has been , quite simply, one of unregulated and effectively unopposed extortion.
tvman, since you declare yourself keen on facing facts, please post some hard evidence, with numbers, supporting your position that rates in Ireland are required to be multiples of rates elsewhere in order to cover their losses due to a relatively low repossession count. Please include in your reckoning the large sums already provided by the public, SVR holders and otherwise, to the same banks, in the form of bailouts and re-capitalization.
 
The fact of high cost / low repossession rates in this Country does not cover the gapping chasm between the SVR in Ireland and that of our European neighbours. The newly formed Competition and Consumer Protection Commission has washed its hand of investigating why SVR's are so high in this Country, spouting some erroneous tack why it will forbear any such investigation. The Irish State owns approximately 60% market share of banking in this Country. Someone needs to complain to the European Commision about the Irish State's anti competitive practices with regard to this issue and a complaint to the European Monopolies Commission would not go astray either. Supporters of high SVR's will complain about slow repossessions etc. Non recourse lending by Banks may be the solution to Ireland's debt problems. It certainly worked in the USA. How on earth can SVR's be so high in this country, some 2% higher than the Eurozone average, this at a time when the ECB has launched quantitive easing, when hedge funds are actually paying the CBI to hold their respective deposits overnight and on shorts. Come on, something appears to be rotten in the State of Ireland.
 
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