Michael McGrath
New LTV rules. Can I put the case of a couple renting who are paying €1,500 per month. Will not be able to save for a deposit. To what extent can the rules be reviewed for them?
Governor: Banks will value that evidence and the evidence from the Central Credit Register. When we review later in the year, we can look at that. It sounds sensible that the track record of paying rent is reasonable. Having said that, buying a house is very different from renting. It's an irreversible commitment. You have to allow a considerable margin to allow for shocks to income.
We allow 15% exceptions, and the track record may be relevant.
McGrath: People who can stay with their parents have a huge advantage over people who are renting.
Governor: These rules affect different groups differently. We know what happened when we had lax rules 10 years ago. We need a system which limits that risk. One way the sector will adjust is that house prices will moderate. The bidding war on houses will be less intense, so people can buy houses for lower prices.
Standard variable mortgage rates for existing customers
Most of the deals are for new customers. Existing customer are being treated fundamentally unfairly.
I hope you tackle this.
This is a clear case of discrimination against existing customers.
What can you do to address this?
Governor: Many markets have different pricing for new customers - I fully appreciate the perception that this is unfair. Our p;osition is that the banks must be run on a commercial basis. We can discuss the level of competion and whter the high rates will persist.
But the bank cannot interfere in the contracts between banks and borrowers.
One of our goals is to make switching easier. As with mobile phones. The bank can work on that.
But we don't have the power to tell banks to treat existing customers the same as new customers
McGrath: You could bring in a code of conduct on mortgage switching.
When the cost of funds is 1% to 1.5% , it is wrong to be charging 4% to 4.5%
if you are an existing customer, you might be trapped. You have a key statutory role in consumer protection.