Greater competition in the mortgage market is in the interest of the borrower – Hayes

Speaking tonight at a public meeting in Carpenterstown organised by Senator Catherine Noone, Brian Hayes MEP said that greater competition in the Irish mortgage market is needed and is ultimately in the interest of the borrower.

“The withdrawal of many international banks from the Irish mortgage market is one of the negative consequences of the collapse in property prices.  In effect, there is now a cosy cartel operating in the Irish mortgage market. The lack of competition in the market means that new mortgage borrowers and existing variable rate mortgage holders are being squeezed in comparison to many European countries.

“At his recent hearing before the Dáil Finance Committee, the Governor of the Central Bank, Patrick Honohan, referred directly to this lack of competition in the mortgage finance market. Because so many banks got their fingers badly burnt in the Irish property crash they are likely to remain ultra-cautious about returning to the market.

“I think there are two practical measures which should be given careful consideration:

“The remit of the Housing Finance Agency could be extended, allowing it to provide long term fixed interest residential mortgages at competitive rates. Using the Housing Finance Agency in this way would be a very cost effective method of bringing a new mortgage provider to the market and there would be no establishment costs involved.

“I also suggest that the largest and strongest Credit Unions either separately or jointly should be allowed to provide a limited number of long term fixed interest mortgages under a well regulated and closely monitored programme. Allowing some Credit Unions to provide residential mortgages is a logical next step in their development.

“Allowing the Housing Finance Agency in particular to provide residential mortgages would allow the Government to influence the market in favour of the borrower and in favour of a stable mortgage finance market.”