Fianna Fáil TD for Cavan – Monaghan Brendan Smith has criticised Government TD’s for failing to support a Fianna Fáil Bill aimed at ending the scandal of banks massively overcharging customers on standard variable mortgage rates.

Deputy Smith made the comments after the Fianna Fáil Spokesperson on Finance Michael McGrath TD introduced detailed legislation in the Dáil recently to force banks to introduce realistic and fair charges for variable mortgage rate holders. The legislation was voted down in the Dáil by Government TD’s.

“Fianna Fáil has consistently highlighted over the last two years as to how the banks are ripping off their variable rate mortgage holders. As it stands there are up to 300,000 mortgage holders on variable rates paying hundreds of euro more per month on their mortgages” said Brendan Smith.

“On a daily basis I speak with many people across Cavan – Monaghan on this very important issue. It is something that is continuously raised with me. People feel they are trapped in a situation which is costing them hundreds of euro per month, and they simply cannot afford these additional costs.

“A mortgage represents the single biggest financial outgoing for a household. Families have been forced to watch in absolute frustration as their mortgage rates have steadily risen in recent years. They are forced to pay up to €500 more per month as a result as compared to new mortgage holders with the exact same mortgage but with tracker rates. This is unacceptable when you consider interest rates are currently at record low levels.

“Fianna Fáil TD’s in the Dáil put the issue on the agenda again at the end of March with a motion on the subject of the rip-off variable rates being charged. Since then the banks have sought to deny the existence of a problem or fob customers off with minor changes to their rates. The Government has been totally lacklustre with its response to the problem and has failed to convince the banks to reduce their punitive variable mortgage rates. This clearly indicates that the Government is not bothered enough to take decisive action.

“Fianna Fáil recently brought forward detailed legislation to end this rip-off once and for all. Unfortunately all Government TD’s failed to support our legislation which would have given the Central Bank the power to put its foot down and regulate the rates charged to mortgage holders.

“Under our Bill, the Central Bank could intervene if it sees that banks are charging extortionate interest rates.  The Central Bank could:

– Enforce a set maximum rate;
– Force the bank not to exceed a set margin above the ECB rate;
– Force the bank to stick to rate that are only a set margin above its own cost of funds; and
– Ensure that the bank does not charge rates more than a third higher than the average variable rates on the market.

“If enacted our legislation would apply to all mortgage lenders, meaning that 46,000 mortgages attached to non-bank lenders would also be included. This includes mortgages that have been sold to vulture funds.

“There is no excuse for sitting back and allowing this rip-off to continue. Fianna Fáil will continue to highlight the need for action to be taken to alleviate the unnecessary financial burden on those who have variable rate mortgages” said Brendan Smith.

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