@Brendan Burgess when I first got involved in this discussion ~2014 on this site, the interest rates were stubbornly holding above 4% with the european average less than half of that figure. There was limited scope to switch, and many banks would not allow their customer lower rates by fixing. A reasonable number of people were still in negative/low equity, and many were still feeling the aftershocks of the bust period and financially on poor grounds. Unemployment was still above 10%. Even if you wanted/were able to switch, it was very difficult to get a rate below 4%.
Roll on 4 years, the landscape has changed quite dramatically. It is now possible to get rates as 2.3%. The majority of people are out of negative equity/low equity and are in a much better position to switch if they choose to do so. Most banks encourage customers to switch to avail of better rates, and most allow those on fixed mortgages to overpay by a reasonable amount. I accept that variable rates may not be as competitive as we would like, but its pretty easy (in general) to break a fixed rate at the moment for most banks.
So what action are FF looking to achieve here? Going back to a discussion we had a number of times - if people are in a position to switch and choose not to do so, then that is ultimately their business. There is nothing that any legislation can do to force them or banks to do so.
I do agree that those who cannot switch need some level of protection, although one could legitimately argue that if you are unable to switch currently you could be seen as a higher risk profile and therefore should be paying a premium on your mortgage than someone who can switch. I would still like to see some level of protection here however.
As you know, my attitude on this one has softened over the last 4 years, as rates have come down much closer to european levels and customers have not acted accordingly, for whatever reason. 4 years ago, I was screaming for new banks to enter the market. Now, I am honestly not sure it would make a difference to the vast majority of mortgage holders.
The sad thing is, FF have no idea why interest rates are high. Or if they do, they've no intention of being honest about it with the public
Back when interest rates were 4% plus, the reason they were so high was the banks needed capitalisation and return to profitability, with trapped variable mortgage holders were an easy target.
Now with interest rates floating around 2.5%, the difference could possibility be linked to (a) increased regulation in the space, (b) levels and costs of repossessions, (c) provisions for future bad debt writedowns and (d) the size of the market but being able to benefit of economies of scale. Another challenge is Ireland appears to love its cashback without the 'tie in period', whereas european's have arrangement fees in general. Its also worth noting that very few European mortgages would be given at 90% LTV and 3.5 times salary.
But we want to have our cake and eat it... and our political parties know this and pander to our wishes !