The Central Bank has been criticised for proposing “unnecessary” changes to regulations governing mortgage switching in Ireland.
The regulator yesterday published proposals to help customers who are seeking to move their mortgage to another bank or mortgage type.
Switching can help to reduce rates by encouraging greater interest rate competition between lenders.
In a consultation paper, the Bank proposed measures to increase transparency on available mortgage interest rates, incentives offered by banks and potential savings. It also set out proposals to standardise switching information and to introduce timeframes within which a request to move lender must be approved.
Bernard Sheridan, acting deputy governor, said that the Bank was proposing the introduction of statutory requirements to support consumers considering switching their mortgage, to ensure that such activity takes place within a transparent framework that protects the best interests of consumers and ensures they are treated fairly.
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“The Central Bank has put in place a strong framework to protect consumers both when taking out a mortgage and throughout the term of the mortgage,” he said.
“In proposing these new measures, we aim to build on these strong protections. These measures will require lenders to provide consumers with the necessary information at the right time to consider their options and ensure that the process facilitates consumers who want to switch their mortgage.”
Brendan Burgess, founder of the Fair Mortgage Rates campaign, said that the proposals would not help consumers. “This is all just unnecessary regulation which provides no benefit at all to consumers,” Mr Burgess said. “It adds to the cost and will probably add to the delay. The costs will of course be passed on to customers in terms of higher interest rates. The Central Bank just cannot understand that pointless regulation is counterproductive.”
Mr Burgess called on the Bank to “face the real issues”, including ensuring banks compete on price rather than cashback offers to attract customers. Lenders should not be able to discriminate between new and existing customers through interest rates, he added.
Michael McGrath, the Fianna Fáil finance spokesman, also called for cashback offers to be banned. “Lenders are taking advantage of the lack of switching in the mortgage market by charging higher rates than are justifiable,” he said. “It would be far better for consumers overall if lenders competed on interest rates rather than cashback offers.”