Brendan Burgess
Founder
- Messages
- 53,473
I have outlined this suggestion in an article in today's Examiner
Time to allow Central Bank to control mortgage rates
The only way to stop the cartel of lenders fleecing Irish citizens is to give the Central Bank the power to control interest rates. But what is the point of giving the Central Bank such power when it doesn’t want it and when its priority is to maximise the profits of the lenders? If it had this power at present, it simply would not use it.
The solution is to allow Irish lenders charge up to 3% above the ECB rate without interference. If a lender wants to charge above this rate, then it would have to justify the rate to the Central Bank. Maybe the banks can justify charging above 3% to customers borrowing 90% loan to value. If so, force the banks to make the case and force the Central Bank to actively agree with the justification.
Would a cap 3% above that of the ECB deter foreign lenders? I doubt it. If they are getting 2.02% in their home market, they should not be deterred by 3.05% in Ireland. If it deters lenders who want to charge 4%, so be it.
Time to allow Central Bank to control mortgage rates
The only way to stop the cartel of lenders fleecing Irish citizens is to give the Central Bank the power to control interest rates. But what is the point of giving the Central Bank such power when it doesn’t want it and when its priority is to maximise the profits of the lenders? If it had this power at present, it simply would not use it.
The solution is to allow Irish lenders charge up to 3% above the ECB rate without interference. If a lender wants to charge above this rate, then it would have to justify the rate to the Central Bank. Maybe the banks can justify charging above 3% to customers borrowing 90% loan to value. If so, force the banks to make the case and force the Central Bank to actively agree with the justification.
Would a cap 3% above that of the ECB deter foreign lenders? I doubt it. If they are getting 2.02% in their home market, they should not be deterred by 3.05% in Ireland. If it deters lenders who want to charge 4%, so be it.