Pearse Doherty misses the point on interest rates

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mouse1

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Speaking during a Leaders Questions debate in the Dáil today on the latest ECB interest rate cut Sinn Féin Finance spokesperson Pearse Doherty called on the government to ‘take steps to ensure that this reduction is passed onto Mortgage holders.’
Deputy Doherty said:
‘Today the European Central Bank’s cut interest rates by 0.25%.
‘This should be welcome news to the more than 100,000 families in mortgage distress across the state and the many thousands more at risk of falling into arrears.
‘However this will depend on whether the Government will take the necessary action to force the banks to respond positively to today’s ECB announcement.
‘Last month, despite all the bluster from Government, Bank of Ireland and Ulster Bank refused to to pass on the last reduction to hard pressed mortgage holders.
‘The Government promised to take action but when it came to the crunch they hid behind the advice of the Financial Regulator.
‘Today some banks have announced their intention to pass on the rate cut. However Bank of Ireland has said it will only pass on a portion of the cut and Allied Irish Bank has said it would not pass on the cut at all.
‘It is time for the Government to intervene and introduce the necessary legislation to force the hand of those banks who behave in such a reckless fashion. Considering the amount of tax payers’ money that has been given to the banks it is about time they were forced to give something back to struggling mortgage holders.’

8 December
 
mouse1 said:
Speaking during a Leaders Questions debate in the Dáil today on the latest ECB interest rate cut Sinn Féin Finance spokesperson Pearse Doherty called on the government to ‘take steps to ensure that this reduction is passed onto Mortgage holders.’
Deputy Doherty said:
‘Today the European Central Bank’s cut interest rates by 0.25%.
‘This should be welcome news to the more than 100,000 families in mortgage distress across the state and the many thousands more at risk of falling into arrears.
‘However this will depend on whether the Government will take the necessary action to force the banks to respond positively to today’s ECB announcement.
‘Last month, despite all the bluster from Government, Bank of Ireland and Ulster Bank refused to to pass on the last reduction to hard pressed mortgage holders.
‘The Government promised to take action but when it came to the crunch they hid behind the advice of the Financial Regulator.
‘Today some banks have announced their intention to pass on the rate cut. However Bank of Ireland has said it will only pass on a portion of the cut and Allied Irish Bank has said it would not pass on the cut at all.
‘It is time for the Government to intervene and introduce the necessary legislation to force the hand of those banks who behave in such a reckless fashion. Considering the amount of tax payers’ money that has been given to the banks it is about time they were forced to give something back to struggling mortgage holders.’
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God this annoys me soooo much - they are completely missing the point!
 
@ DB74 - I think Kaza is referring to them missing the point that such a disparity exists between what the state owned banks are charging, not the passing on of the recent ECB reduction.
 
DB74 said:
I thought Pearse Doherty was pretty much on the button there actually.
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The point I mean is that PTSB is never highlighted because they pass on the reductions - but yet when you look at the historical interest rates since 2007 the ECB has reduced by 3% - of which PTSB has actually only passed on 0.25% of a reduction because of all the side line increases it has placed on it's customers.

Whereas the likes of AIB who where heavily pushed into passed on the November ECB reduction has actually passed on 2.2% of the 3% ECB reduction since 2007.

But yet the government highlight AIB, etc.. for not passing on rates when their rates are actually much closer to ECB rate than PTSBs are.

So when I say missing the point I mean they are simply looking at who is passing on the latest reduction when they should be looking at the overall picture of how much above the ECB rate each of the current banks are charging their variable rate customers to compare them properly.
 
Fair enough, I see your point

Maybe someone should work out how much a €300,000 mortgage costs per month/annum with each of the banks and present this to the Minister

IMO the rates themselves are just figures to them and the actual "pure" figures are so small (ie 2% vs 5% doesn't seem that bad) so unless they see actual visual evidence of how punitive the rates are and how they are hitting someone's pocket, nothing will be done about it

I'll have a quick look and see
 
To be fair to Pearse Doherty he is pretty good because he is principled, if anyone would highlight what PTSB are doing it would be him - I hope he knows, because I haven't heard him mention them very often!
 
I sent a copy of the thread to Pearse and I got this reply:

I disagree with you that I have missed the point on the mortgage interest rate issue. For me there are two issues. This first is the significant difference between the variable rates which need to be standardised, with the likes of PTSB lowering theirs. The second is ensuring that all mortgage providers pass on the ECB rates. I have raised both issues in the Dail and in the public arena and will continue to do so. Unfortunately the Government is refusing to introduce the legislation to give the power to the regulator to intervene on both of these issues (partly because the Regulator is saying that he does not want the powers). However I and my party colleagues will continue to raise both issues at every opportunity in our attempt to force the Government's hand on this issue.
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I have not heard his comments about the PTSB, but I welcome them

I have heard him on many occasions calling for the simplistic "the banks should be forced to pass on interest rate cuts and if they don't agree, we should bring in legislation"

The call for legislation is seriously misguided.

It takes the focus off the biggest problem which is PTSB.

It looks for a complicated solution - legislation - when there is no need for such legislation. The government owns PTSB and can tell them to reduce the interest rate.

Legislation is not a solution for the following reasons

  • There are pros and cons of giving the power to control interest rates to the government or Central Bank. Like most people, I don't think it's a good idea except in exceptional circumstances.
  • It would take years to get such legislation through the Dáil.
  • There are much higher priorities for the limited legislative resources e.g. the new personal insolvency legislation.
  • Any legislation giving the government the power to control interest rates would be challenged as unconstitutional
  • It is likely that the EU would not allow such legislation
  • Even if it passed all the above tests and the legislation was introduced, we would have to debate all over again what an appropriate interest rate was.
So Pearse Doherty and other TDs could short circuit all that and persuade the government to address the problem which it does have the ability to fix immediately - i.e. call in the PTSB board and tell them to reduce their rate. If they don't agree, they should be replaced.
 
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