The Minister for Finance Michael Noonan is to call a meeting of the six major lenders in the Irish marketplace and ask them to reduce their mortgage interest rates.
Michael Noonan said today he is awaiting a report from the governor of the central bank which should give him a cost analysis of how the banks, including Bank of Ireland and AIB, could reduce their mortgage rates.
Mr Noonan said he is to put “additional options on the table” to try to help those still in severe mortgage debt.
He described as “very welcome” an initiative announced by Ulster Bank to write to 2,000 people in arrears telling them if they sell their homes they will not be pursued for the outstanding debt, if they are on low incomes and eligible for social housing.
“I thought it was a very interesting, and from (government’s) point of view, a very welcome initiative. We are working at present on adding to the menu of options for the banks and their relationships with people with impaired mortgages,” Mr Noonan said.
“110,000 mortgages have been reconstructed using the menu of options that is there now, and they have been satisfactorily reconstructed, but we know now that as you come down to the very difficult cases at the end, other options are necessary.
“I welcome this initiative from Ulster Bank, it’s another option and I hope it will work.
“In the next couple of weeks, the government, after consultation with the banks, will be putting additional options on the table to deal with the residue of the most difficult cases, which haven’t been resolved already.”
Mr Noonan said he has already consulted with the governor of the Central Bank.
He said: “He has done a piece of analysis to show the margin, between the cost of money and what they are getting for money when they lend it for mortgages, and he has that for me in the next 10 days or so.”
“I’m calling in then, the senior management of the six major lenders in the market in Ireland, and I’ll present them with the evidence from the Central Bank, and I’ll say to them I think they should reduce their interest rates and that we want to discuss it, and I’ll want them to explain why they can’t, but we’d prefer it if they did.”
“If you call that pressure, that’s pressure, but I would see that as a discussion (with the banks) in the normal way. But I don’t have legal authority to direct (the banks),” he added.