Bill would see higher mortgage rates for customers and an increase in repossessions
The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, will this afternoon (Tuesday) attend the Joint Committee on Finance, Public Expenditure, and Reform and An Taoiseach (FINPERT) meeting to consider the draft Report on its detailed scrutiny of the Private Members’, No Consent, No Sale Bill, 2019.
Earlier this year, the Department of Finance made a submission to the Committee outlining, in great detail, the serious concerns that it has in relation to the proposed Bill. The Submission highlighted fears that would likely result if this Bill was to be progressed. They include:
- Higher mortgage interest rates for customers, particularly those with standard variable rate mortgages;
- Reduced availability of mortgage lending overall, with stricter conditions:
- A potentially severe restriction in Irish banks’ capacity to access Eurosystem credit, particularly in a crisis or at times of market stress (total monetary policy lending to Irish domiciled institutions rose to €140 billion towards end of 2010);
- Institutions losing the ability to use securitisations, in all its forms;
- Increased repossessions by banks as their ability to reduce NPLs through sales will be severely reduced;
- A reduction in new entrants and less competition in the Irish mortgage market; and
- Significantly reducing the value of the State’s shareholding in the banks.
Minister Donohoe said:
‘We cannot ignore the very serious concerns expressed by my Department, the Central Bank of Ireland and the European Central Bank in relation to this Bill. The possible unintended consequences from this legislation are wide-ranging, with grave outcomes. It is essential that we continue to be very considered in our policy making and legislative interventions and that legislation that has the potential to hinder the Irish mortgage market in this way, with such serious repercussions for Irish home owners, is not progressed further’.
This Private Members Bill is a “copy and paste” of a 28 year old, outdated voluntary Code of Conduct on the Transfer of Mortgages. The Central Bank has stated that it is of the view that the voluntary Code of Practice is not appropriate in the modern financial environment, and certainly not in statute. Furthermore, the Central Bank informed the FINPERT Committee in April that they intend to remove the voluntary code as they view it as redundant.
Minister Donohoe continued:
‘I hope the Committee’s consideration of the draft scrutiny report today will be evidence-based, with detailed analysis speaking to all the serious concerns that have been raised by all stakeholders. The Government remains committed to assisting all those in mortgage arrears and encourages those in difficulty to contact the State-funded Abhaile Scheme that provides free legal and financial advice. We have already seen the positive results of engagement between lender and borrower, with almost 100,000 restructures in place at the end of Q1 2019. We will continue to work to ensure that adequate protections are in place for home owners and that supports are in place to help those in need of them’.