Dáil Éireann debate -
Thursday, 20 Jun 2024

I move: "That the Bill be now read a Second Time."

We initiated this Bill last year, 2023, in response to ten interest rate hikes by the European Central Bank, ECB, which impacted tens of thousands of mortgage holders in this country. These are working people who are trying to put a roof over their heads and they were hammered again and again by interest rate hikes by the European Central Bank. In the period between July 2022 and April of this year, we saw interest rates climb from 0.5% to as high as 4.5%. That led to enormous increases in the repayments people have to make, impacting in particular those whose mortgages are held by vulture funds and those whose mortgages are held by bank lenders but who have tracker mortgages that track the ECB rate, variable rate mortgages or mortgages where the rate is only fixed for a year or so and then becomes variable. All these people were vulnerable to, or actually hit by, shocking increases in interest rates.

Some 700,000 people have mortgages, of which 95,000 are with vulture funds. Some 200,000 people have tracker mortgages, of which 35,000 are with vulture funds and 165,000 with banks. There are 186,000 mortgage holders on variable rates. That is an enormous group of people, tens of thousands of people, who have been hit by these interest rate hikes. As a result, many people are in trouble. To be precise, 47,734 mortgage holders are in arrears, of whom 29,000 are in arrears of more than 90 days and 60%, or 17,420, are in arrears of more than a year. Many people are struggling with the impact of these interest rate hikes. That is in the context of a wider cost-of-living crisis where we have seen hikes in energy costs, rents - if you have a mortgage, rent increases do not necessarily affect you, I suppose. Other increases in grocery prices and so on have an impact, along with cuts in the value of people's incomes in real terms because of inflation.

I will speak about a few instances I am aware of to give some flavour of the impact. One of my constituents who is a single working mother was paying €1,170 per month on her mortgage in 2020. She is currently paying €1,965. At its peak her payment went up to €2,009 per month. There was a 0.25% reduction in the ECB rates recently, but even with that tiny reduction she is still paying more than €800 more than she was paying in 2020 - that is a massive hit - and she is paying a 5.6% rate. As well as these interest rate hikes happening all over Europe, in Ireland people are paying significantly more than the ECB rates and are therefore hit even harder and more dramatically by the hikes. For those who have mortgages with the non-banks, the vulture funds are charging 6.09% on variable interest rate mortgages and 5.59% on trackers, while the banks are charging 4.07% for variable mortgages and 5.6% for tracker mortgages. Some people are paying considerably more than that.

Critically, the banks and vulture funds that are doing this are making an absolute fortune. Permanent TSB, which owns the mortgage of the single working mother I mentioned, saw its profits increase last year by 71%. That is an enormous jump in its profits. Bank of Ireland, which is the biggest mortgage lender in this country, saw its profits jump last year by 92%, up to €1.9 billion. These same banks are also depositing tens of billions of euro with the ECB, profiting from the hiked interest rates and therefore making money on the money they deposit with the European Central Bank while absolutely crucifying ordinary working people who are trying to cope with these shocking increases in their mortgage repayments to the point that for many people it is simply unsustainable. In the face of this, the Government has done almost nothing, certainly nothing that would have a significant impact on the dramatic impact people are experiencing as a result of these interest rate hikes by banks that are raking in profits.

What does our Bill do against that background? It proposes a cap on mortgage interest rates to be set at 3%, so the banks cannot profiteer and can absorb the ECB rate hikes using the enormous profits they have made, which have increased dramatically in recent years.

If the net effect of that is to drive the vulture funds out of the Irish market, we would be very happy. Some people will say these funds will not want to operate here. Good; we do not need them. In fact, I was talking to someone the other day who is an expert in this area who said that, to add to all of this, the vulture funds are now securitising some of their mortgages so that you cannot even deal with them in the way you can deal with a bank, even a bank that is ripping you off, because the funds are securitising the mortgages into bundles. They are essentially speculating with people's debts. This is another dimension to this problem. We are saying let us cap the interest rates at 3% so they become sustainable for ordinary working people and they do not find themselves in arrears and threatened with the loss of their homes.

Some people would say we cannot possibly do that. In fact, in Belgium, France and Italy, of three countries I know of in western Europe, have reference interest rates and a mechanism whereby banks cannot charge a certain amount above those reference rates. What we are arguing for is not that radical. It is entirely doable, particularly given the profits being made by the banks. When we consider that we bailed out the banks to the extent we did, which are now making enormous profits, is it not right, fair and just that we would bail out mortgage holders who are being absolutely crucified and crippled by these mortgage interest rate hikes?

This is a huge issue affecting hundreds of thousands of people in this country. One in three mortgage holders is paying at least €3,000 more per year than they were just one year ago. One in five is paying almost €6,000 extra a year. This is a huge cost-of-living crisis which has its roots in the same profiteering that lies behind the rising cost of rents, food and fuel. All of them are caused by profiteering corporations and a Government which refuses to do anything about any of these crises. The reason it gives, and the one I presume we will hear from the Minister of State today as to why we cannot do anything about the mortgages, is that we do not want to interfere in the market. We cannot have price controls on petrol, electricity or groceries and we certainly cannot have controls or caps on mortgages because we are meant to have a free market.

The truth is that this free market does not really exist. We all remember 2008 when the bubble burst and so-called private developers and private banks were then bailed out with public money. When the private market no longer suited them, the State stepped in to bail them out. The Government has no problem interfering in the market when it comes to benefiting landlords, developers and bankers but it refuses to interfere in the market in the interests of ordinary working people. Workers are supposed to pay for the high house prices and high rents you get during a bubble. Yesterday we heard that house prices are now 10% higher than they were at the peak of the Celtic tiger. Now, not only do we have the highest rates of homelessness and rents ever but we also have the highest prices ever. Then, when the bubble bursts, workers are expected to bail out the speculators who benefited from the high prices. Workers get shafted during the bubble and get shafted during the bust. But it is a great system for those in the golden circle that Fianna Fáil, Fine Gael and the Green Party represent.

One of the arguments we will hear against this Bill is that it would deter new banks from coming in and competing against the existing banks because interest rates would be capped, the idea being that competition is the answer to the problem here and that the unregulated market we have had and which led to the banking crisis of 2007, 2008 and 2009 is somehow the answer to ordinary people's problems, which obviously it is not. Deputy Boyd Barrett has made the point that interest caps exist in several European countries and the sky has not fallen in. Belgium, France and Italy already cap mortgage interest rates.

I also make the point that this Government, just two years ago, introduced caps on interest rates for moneylenders where something like 187% is the maximum rate that can be charged annually. The Government recognised there are extreme examples of exploitation by these payday lenders and it moved to curb some of the extreme and worst parts of it. It showed it can be done. We can intervene in the market and prevent ordinary mortgage holders being ripped off.

It has been 16 years since the crash in this country during which banks and vulture funds have been free to set whatever rates they like. What we have ended up with through this process of great competition is some of the highest interest rates in Europe and, at the same time, parallel and connected to this, some of the most profitable banks and vulture funds in Europe. We know AIB and Bank of Ireland are now making record profits. Close to €4 billion was made between them last year, and for what? It was literally for keeping billions of euro of our money, our deposits, on deposit with the European Central Bank at 4.25% interest and then charging customers here among the highest mortgage interest rates in the European Union. This is very easy and very nice money if you can get it. We do not have any idea how much profit the non-banks or vulture funds are making, but given they are charging people even more than the banks are, in some cases 7% or 8%, it is a safe case that they have even higher profit margins than the banks.

We in People Before Profit have always said, exactly as Deputy Boyd Barrett has said, that we do not need these vulture funds. If we can drive these vulture funds out of Ireland, all the better. We do not agree with Michael Noonan of Fine Gael who said "vultures provide a very good service in the ecology [because they clean] up dead animals that are littered across the landscape". He welcomed the vultures into this country with open arms. We think that is an offensive way to talk about the 95,000 families in this country with mortgages owned by vulture funds. The kind of service they need is not a carnivorous vulture that feasts on human misery but a not-for-profit banking system run as a public utility, a publicly owned banking system that actually provides people with a reasonable service by giving them access to credit without ripping them off or making their lives hell and, similarly, gives access to credit to small businesses. All of that is too much to ask of this right-wing neoliberal Government.

I will give a couple of examples of what this looks like, because in refusing to cap mortgage interest rates, the Government is saying to the 95,000 households with vulture funds, in particular, that it is going to leave them with these vultures and that it is, effectively, throwing them to the wolves. I give an example of a woman I met a few months ago who lives in west Tallaght in an area of significant deprivation. She owns her house and had, like many people, a crisis. She was with Ulster Bank and went into a personal insolvency arrangement and did everything she was meant to do. She paid all of the money she was meant to pay and then, effectively, when she was coming to the end of that arrangement, Ulster Bank was very clearly preparing to sell the mortgage on to a vulture fund, Promontoria Scariff. As a result, her mortgage interest rate has shot through the roof. In June 2023, she had an interest rate of 3% and was paying just over €1,000 a month. Since then, she has had three interest rate increases and is now paying 5.25% and almost €1,400 a month. This is an increase of €300 a month in the space of less than a year and an increase in her outgoings at a time of all of the other aspects of the cost-of-living crisis.

I will give another example of a woman who contacted me to say that her loan was sold a few years ago to Start Mortgages, which is now transferring to Mars Capital Finance, and she is paying 7.5% on her interest-only mortgage. She is 60 years old and can see no way of getting out of it. She says all they want is money and her house. That is the point with these vulture funds. I was talking to somebody today about something unrelated and he said that now that his mortgage was with Pepper, the minute he misses something, Pepper is on to him. It simply wants a chance to take people's properties and homes off them.

If the Government will not cap mortgage interest rates at 3%, will it at least stop vulture funds from charging working people so much more than the main banks?

What possible justification can there be for allowing this to continue? Why, 16 years after inviting these companies in, is the Government still refusing to take on the vultures and instead take the side of ordinary people? Not only that, why is it continuing to entice in more and more foreign capital rather than using the €65 billion surplus it has to invest in public, social and affordable housing for all?

Yesterday, the Department of Finance published a report stating that €20 billion in housing finance will be needed annually to build the 50,000 new homes a year it says we need. Despite having a massive €65 billion surplus over the coming years, its plan is for 80% of that €20 billion to come from private capital and only 15%, or €3 billion, to come from public money. That means ignoring the recommendations of its own Housing Commission that at least 20% of the housing stock should be public. It means, just as now, that the housing of the future will be private. It will be expensive because relying on private capital to build housing means housing will be an asset built to maximise profit for developers, banks and vulture funds and not to secure the affordable decent homes that people need and should have access to as a fundamental human right.

Our Bill seeking to cap mortgage interest rates at 3% is a small intervention to end the merry-go-round of a boom-and-bust cycle of private housing and the finance market. It seeks to set a limit on the gouging of mortgage holders by banks and vulture funds and to provide that banks, which are making €4 billion a year in profit and received billions of euro in bailout money, and vulture funds that feasted off the crash, should have to give something back and that at least some limits should be placed on their gouging of those workers who bailed them out.

I thank Deputy Boyd Barrett for initiating this Bill.

The Bill proposes to cap mortgage interest rates on private dwelling home mortgages and to give the Central Bank the power to issue a direction to all mortgage lenders setting out the maximum APR chargeable on housing loans, that being a rate not exceeding 3%. The Government is opposing the Bill and I will outline shortly some of the reasons it should not be accepted.

I acknowledge the intention behind the Bill, which is to help people with their mortgage repayments and ensure that the cost of a mortgage is not inappropriately high. I share the Deputy's concerns about the difficulties that the current level of interest rates, and the cost of living more generally, are causing for some mortgage borrowers and homeowners.

High inflation pushed up costs, reduced people's real incomes and increased economic uncertainty. As interest rates are the main tool to combat inflation, mortgage rates have also increased, putting additional pressure on some households. Since the summer of 2022, the ECB has increased its official interest rates as it sought to tackle high inflation. This increase in official interest rates feeds into the general level of interest rates throughout the economy. However, in a market economy the determination of retail and business lending rates is a commercial decision for individual lenders and creditors. While the level of official interest rates will obviously be a significant factor in such considerations, as it forms a base interest rate for the whole economy, other market and individual business factors also play a role in determining market interest rates and the cost of credit for different types of business and consumer borrowers.

The level of official interest rates does not have a uniform impact on the interest rates charged on retail mortgage and other credit products. Due to their particular contractual arrangements, most tracker mortgage borrowers will see their interest rate change in line with the ECB rates. As a result, such borrowers have seen the largest increase in interest rates over the past two years, albeit from low levels for a prolonged period before that. The pass-through rate has been somewhat lower in the case of variable rate mortgages, but some variable rate borrowers have also experienced large increases in interest rates, in particular those whose loans are held by certain non-bank creditors.

For borrowers on fixed-rate mortgage contracts, their interest rate will not change over the period the interest rate is fixed. In overall terms, due to high levels of mortgage fixation, the Central Bank has indicated that approximately 40% of mortgages will be insulated from higher rates to the end of 2024 or later.

The Government is fully aware that the increase in the level of interest rates, allied to the general increase in the cost of living, is causing difficulties for many mortgage holders. It is essential, therefore, that lenders and servicers assist their customers who are experiencing difficulty. Borrowers should be aware that strong consumer protections and supports are in place and they should fully avail of this framework as needed.

As Deputies will be aware, budget 2024 introduced a mortgage interest tax relief for homeowners with an outstanding mortgage balance on their primary dwelling house of between €80,000 and €500.000. Relief is now available in respect of the increased interest paid on the mortgage in the 2023 calendar year as compared with the amount paid in 2022, at the standard rate of 20% income tax. In addition, a series of other significant cost-of-living measures were provided in the budget to assist households.

The Minister for Finance met the CEOs of banks and other mortgage entities last autumn and indicated that they should support their customers at this time of increases in the cost of living and rising interest rates. In response, the industry outlined a number of further measures to assist their customers experiencing difficulty and provided further clarity on eligibility criteria for switching mortgages. The Government, therefore, has taken a number of important and practical measures to help mortgaged and other households with interest rate increases and other rises to the cost of living.

We should be cautious about looking at simple measures to change the mortgage market. The residential mortgage market is a very significant one for the Irish economy and society in general, and is of particular importance for the financial system and housing market. From an overall perspective, it is important that the mortgage market works and delivers good outcomes for both the suppliers and consumers of mortgage finance products.

The size of the mortgage market is very large in the Irish economy. Based on Central Bank data from the end of 2023, there were 707,000 primary dwelling house mortgage accounts with an aggregate amount of €101 billion. New mortgage lending in 2023 amounted to €12 billion. The intervention proposed in the Bill, which sets a low fixed cap on the price of mortgages without any regard to the funding or other costs associated with providing such products, is a radical measure which could significantly unbalance the market and could have detrimental and long-term negative impacts.

A well-regulated, market-based financial system is designed to facilitate the formation of fair and reasonable prices. The capping of mortgage interest rates at very low fixed levels would not be easily compatible with the operation of an open market economy. Active and free competition between lenders, rather than administrative control of the price of mortgage credit, is a better way to create a sustainable long-term mortgage market as it can better match the demand for mortgages with the costs associated with the supply of such a financial product over the longer term.

The greater the flexibility the suppliers of a product or service have to determine the price they wish to provide a product or service, the greater their desire to enter and compete in a particular market. Where the ability to determine the price is inappropriately restricted or controlled, in particular, if the price is set at a level that will not cover the marginal costs of the service, suppliers will be reluctant to enter or stay in the market.

Given that we have a relatively small domestic financial services market in international terms, it is always a challenge to attract and maintain financial services providers. A Bill such as this would make that a significantly more difficult task. There is nothing more likely to curtail and discourage new entrants to the market, or deter existing participants from remaining in the market, than a law which caps mortgage interest rates at a low level without any reference to the funding and other costs associated with producing and servicing such mortgages.

The pricing of products and the management of risk are core functions of the financial system and the commercial firms operating within such a market. The long-term health and stability of the banking system requires that firms operate on a profitable basis. Well-capitalised banks operating more competitively will, over the longer term, offer lower rates than a system which places strict administrative controls on the setting of mortgage interest rates.

If public authorities were to regulate the pricing of loans, it would be akin to taking responsibility for the management of risk over the course of an economic cycle, which is a core function of the financial system and firms operating within that market. This would also have adverse consequences for the supply of mortgage credit and would, having regard to the level of the cap and the prevailing level of wholesale money market rates, likely be loss making, at least in terms of marginal revenue and costs, for the providers of mortgage products.

Furthermore, to the extent that any new mortgages were provided under such a framework, it is likely that it would be extended only to premium borrowers and would effectively exclude many other creditworthy borrowers from accessing mortgage credit and, by extension, the private home ownership market.

It is not immediately clear if the Bill is to apply to new mortgages only or if it is to also apply to existing mortgages, including fixed-rate and tracker mortgages. If it is the latter, significant legal and constitutional issues would have to be considered. It is also not clear that the Bill's requirement for the Central Bank to issue interest rate directions to mortgage lenders could be compatible with its existing monetary policy, financial stability and prudential responsibilities.

Indeed, the Central Bank has previously indicated that it does not want the power to regulate interest rates and it does not consider that such a development would be in the interests of the financial system or the wider economy. Overall, the Government is of the view that a competitive but well-regulated market is the best way to achieve a sustainable mortgage market. Ultimately, more competition and more choice will better serve the interest of consumers. It should be noted that a range of mortgage products, from various types of green mortgages to different fixed interest rate products, including long-term fixed interest rate products, are now available to customers.

On regulation, a robust consumer protection framework is in place for mortgages and other credit agreements. This consumer protection framework provides the same protections for all consumers, regardless of the regulated entity with which they are dealing. This framework seeks to ensure that all Central Bank regulated entities are transparent and fair in their dealings with borrowers and that borrowers are protected from the beginning to the end of their mortgage life cycle. The consumer protection framework available to relevant borrowers includes these protections and rights under the Central Bank’s consumer protection code and the code of conduct on mortgage arrears. In addition, it includes the right to take an unresolved complaint a consumer may have with a financial provider to the independent Financial Services and Pensions Ombudsman. It is important that this consumer protection is kept under review and, as Deputies will be aware, the Central Bank is currently carrying out an in-depth review of its consumer protection code. It currently expects to introduce a new consumer protection regulatory framework early next year.

The Government does not agree that official administrative interest rate controls are the best way to regulate the mortgage market or help borrowers. The Minister for Finance has made it clear to the mortgage industry that it should support its consumers at this time of increases in the cost of living and rising interest rates. The Minister and his officials continue to work closely with all relevant stakeholders to ensure that borrowers are protected to the maximum extent possible. The Central Bank continues to closely regulate firms to ensure that they meet their obligations under the existing regulatory framework, including how lenders approach and implement changes and deal with borrowers facing mortgage arrears with respect to their obligations under the consumer protection code and the code of conduct on mortgage arrears.

The recent reduction in ECB interest rates is a welcome development. Tracker borrowers will benefit from this, as they will also benefit from an upcoming change in September to the way that the ECB conducts its monetary policy operations. Taken together, these changes will see a significant reduction in tracker mortgage interest rates.

We thank Deputy Boyd Barrett for the opportunity to discuss the Bill. The proposal he brought before the House is well intended. I hope he will understand that, for the reasons given, the Government cannot support it proceeding from this Stage.

I thank Deputy Boyd Barrett for bringing this legislation before the Dáil. Workers and families have seen a sharp, sudden and significant increase in their mortgage costs since 2022. Since the European Central Bank first increased its key interest rates in July of that year, average mortgage interest costs have increased by a whopping 70%. For so many, these increases have been crucifying, with many households paying thousands of euro more per year in mortgage interest compared with two years ago.

My party has been raising this issue for some time. From 2022, Sinn Féin called for the introduction of targeted mortgage interest relief that would provide relief at source, supporting households with 30% of their increased interest costs and providing relief of up to €1,500. The Government criticised and opposed this proposal for months, only to perform a screeching U-turn by introducing a mortgage interest tax credit in the budget. Of course, there are serious problems with this credit. It is estimated that up to 138,000 mortgage holders, who have seen their mortgage costs rise, are locked out of the credit because their mortgage balance was less than €80,000 in 2022. According to the most recent figures, less than 19,000 households have availed of the tax credit, with only €18 million of the €125 million allocated to the credit having been received by households. There is also the unacceptable situation whereby low-income households cannot access the tax credit because they do not have an income tax liability. We are aware of lone parents who have seen their mortgage costs soar but are unable to receive the credit simply because they are in receipt of the single person child carer tax credit. We have raised this issue many times. It must be addressed.

Our mortgage market is highly dysfunctional. Our retail banking sector is highly concentrated, which does little to drive down interest rates and prices, given the lack of competition in the market. On the issue of mortgage interest rates, the average Irish interest rate on outstanding mortgages is higher than the euro area average. On the other hand, we have seen a massive growth in the profits of our retail banks since the ECB began increasing its interest rates. It is true to say that this surge in profits has largely been a function of the ECB increasing interest rates and the net interest income of banks soaring as a result. All the while ordinary households feel the squeeze.

We then have those households that had their mortgage loans sold off to vulture funds. This is something Sinn Féin has always opposed and repeatedly warned of. Those warnings went unheeded, with the then finance Minister, Deputy Donohoe, even going so far as to say he would be happy if his mortgage were held by a vulture fund. Of course, this was nonsense, which is something anyone whose loan is held by a vulture fund will know only too well. Today, those people are being charged interest rates so much higher than those charged by retail banks, with many unable to switch to a mainstream lender. They are effectively mortgage prisoners with some facing interest rates higher than 7%. I understand the message from the Minister of State on the floor of the Dáil today is to shop around. It is the second time we are hearing that from Fianna Fáil. It did not go well for them the first time. These people know that products may be available but they are effectively mortgage prisoners. If they could switch, believe me, they would. They must be offered a pathway back to the mainstream mortgage market.

The Bill proposes a cap on mortgage interest rates effectively set by the Oireachtas. Similar Bills have been brought before the Dáil previously. My colleague, Deputy Doherty, introduced the Central Bank (Mortgage Interest Rates) Bill in 2015, which would have granted the Central Bank powers to impose a cap on variable mortgage interest rates. In 2016, the Minister, Deputy Michael McGrath, introduced the Central Bank (Variable Rate Mortgages) Bill, which would have also granted the Central Bank powers to impose a cap on variable mortgage interest rates in certain circumstances. In 2022, Deputy Nash introduced the same legislation. This legislation differs in that instead of granting the Central Bank powers, the Oireachtas would direct the bank to impose a cap set at 3% APR. It proposes that the Oireachtas effectively regulates mortgage interest rates. Of course, we may question whether the Oireachtas should become responsible for the interest rates banks are permitted to charge or whether such powers should be granted to the Central Bank. What is clear is that the interest rates many are facing, including those charged by vulture funds, are excessive and crippling, and action is very much needed.

It is unacceptable that these mortgage holders had their loans sold off by banks and were promised that they would enjoy all the same protections, but now face interest rates so much higher than those being charged by their previous lenders. Therefore, there is merit in the Bill progressing to Committee Stage. At that stage, the committee can discuss and assess how best to address this problem to ensure that mortgage interest rates charged are fair and transparent, not excessive and punitive.

I again thank Deputies for speaking to the Bill. I also thank Deputy Boyd Barrett for bringing it to the House. We are all acutely aware of the high mortgage repayments currently faced by some mortgage holders and the stress and hardship this causes for families. The Government has undertaken a number of initiatives, including measures in the budget, to help people impacted by the rise in interest rates. Now that the ECB has reduced rates, the pressure on some of those affected should start to ease shortly.

Nevertheless, it must be remembered that depending upon the terms of a particular mortgage contract, the setting of interest rates is ultimately a commercial decision for individual firms. Creditors take many factors into account when setting and adjusting their lending rates, including the cost of wholesale and retail funds, risk appetite, operational costs, expected return, competition, and desired market segment. However, the Government believes that any move to administratively control interest rates, as proposed in the Bill, should not be undertaken without due consideration of the potential long-term negative impacts for borrowers, the viability of the banks, and the wider good of the economy and our country.

The Government believes that increased competition in the banking sector will, over the longer term, better exert pressure on the banks to reduce mortgage interest rates. Competition to reduce interest rates results in better outcomes for consumers, the economy and the country as a whole. While two banks have left the market in recent times, it is a welcome development that new entrants offering mortgages have increased consumer choice.

In addition, credit unions are emerging as an important sector in the provision of new mortgages. Further evidence that competition works can be seen in the fact that many lenders have recently reduced some of their mortgage rates. This, in turn, encourages their competitors to respond by lowering rates and prompts customers to seek better deals. Capping interest rates would stop lenders competing on interest rates and would also deter new entrants to the market, which would not be in the long-term best interests of consumers.

The Government has already taken action on this issue in last year's budget when the Minister for Finance introduced a one-year mortgage interest tax relief for homeowners within certain limits. The Central Bank consumer protection framework is strong and protects all mortgage borrowers, particularly those borrowers experiencing repayment difficulty. This is currently being reviewed by the Central Bank to ensure it is kept up to date.

Now that inflation is slowing and interest rates are reducing, it is hoped that this trend can be maintained. Some banks have already reduced rates and it is hoped that this can continue. It would therefore be unwise to intervene in the market in the manner proposed by this Bill as it would only stifle competition. The Central Bank has previously expressed its view that administrative controls on interest rates are not compatible with the principle of an open market economy and that it would be akin to taking responsibility for the management of risk, a core function of the financial system and its firms.

For all of these reasons, the Government is opposing this Bill. Overall, it has serious concerns about it and believes that, if enacted, it would be very likely to restrict competition in the market for residential mortgage credit to the detriment of the borrowers and future borrowers it hopes to assist. Nevertheless, with regard to the future evolution of interest rates, the Government is of the view that, where interest rates were increased in tandem with ECB rates, they should now decline in tandem with ECB reductions. The Minister and his officials will continue to work closely with all relevant stakeholders to monitor this issue and to ensure that the existing consumer protection framework continues to provide the maximum possible protection to consumers. We thank the Deputy for raising this issue.

I thank those who contributed to the discussion. While the new deputy leader of Fianna Fáil was terribly polite in his response, the net interpretation of what he said is really that the Government is not going to do anything and will let the free market decide. Lola, who I mentioned earlier on, is paying €900 a month, or €10,000 or €11,000 a year, more than she was two years ago. She most certainly is not getting €10,000 or €11,000 more in her wage packet. In fact, the real value of her wage packet will probably have dropped because of the rest of the cost-of-living hikes. There is no help for her. The free market is going to decide and the Government can do nothing.

Lola's story is repeated for tens of thousands of working people while the fact of profiteering by the vulture funds, which are creaming it, does not get a mention in the Minister of State's response. Something I did not mention but that we should mention is that those vulture funds bought those loans at approximately 50% of their original value. They still charge interest to the mortgage holder on the full value of the loan but they got that loan at 50% of the value and, in some cases, even less than that. It is win-win for the vulture and crushing impacts for working people like Lola and tens of thousands of others. The Government says there is nothing it can do.

There was something I found ironic in the Minister of State's speech. I do not know how many times I have heard this Government accuse the socialists of being ideological but I have never heard such an ideological response as the one we have just got. It is an ideological response that bears absolutely no relationship whatsoever to reality. The Minister of State simply asserts that we could not possibly do this because the free market and competition would be better. It is self-evident that competition is not better for the tens of thousands of people being feasted upon by the vulture funds and the profiteering banks that the Lolas of this world and every other working person in this country bailed out. We were able to interfere with the market to prop up the banks that had failed. There was no problem there. There was no problem with distorting the market to prop up the banks but the Lolas of this world have to take it in the neck. Tens of thousands are going into arrears and some end up not being able to sustain their mortgage repayments and lose their homes. Many more do absolutely anything they can to pay off their mortgages. That is what most people do. They will do anything but their quality of life is absolutely hammered while these vulture funds and the profiteering banks we bailed out are making profits. It is win-win for them. No matter what happens, they win.

What is also interesting is the claim that the market has to set interest rates and that we could not possibly have an administrative setting of interest rates. What does the Minister of State think the European Central Bank is if not an administrative setter of interest rates? That is not the free market; it is an institution set up by states that sets interest rates. It is done all of the time. While the European Central Bank is not exactly a democratic institution, it is an institution set up by the member states of the European Union that administratively sets interest rates so the idea that we cannot set interest rates to the benefit of and to protect mortgage holders, ordinary working people, is a nonsense. The truth is that the priorities of the European financial institutions and governments are to dance to the tune of the banks and big business interests. That is the reality but the Government says no and that the banks must be protected. It will intervene on their behalf but will not intervene on behalf of ordinary working people.

The Minister of State also failed to respond to the fact that some states do set reference interest rates and do not allow lenders to depart from those rates by more than a certain amount. This is done in a number of countries in western Europe, as we outlined, but there is no response to that fact. It can be done and is being done but the Government response is to simply trot out ideological formulas that bear no relationship whatsoever to reality.

I will again state the blatantly obvious. Any hope that competition will solve this problem has to deal with the reality that we have actually seen a reduction in competition without mortgage interest rate caps being imposed. Ulster Bank and KBC have left. The way they treated their customers was absolutely disgraceful but they left. Even when you do everything these banks want, they make their decisions purely on the basis of what is profitable for them. They do not give a damn. Even though there were hundreds of thousands of Ulster Bank customers in this country who had been with the bank all of their lives and sometimes for generations, it just upped and left without a care for the consequences and it flogged their mortgages off to vulture funds to pick their carcases. That is the reality. I do not know why it seems so crazy to suggest that, if we have shown ourselves willing to subsidise these profit-hungry banks, we might be able to do the same for ordinary people when they are struggling and that we could subsidise people. Perhaps we could even subsidise them by reaching into and reducing the profits of those financial institutions when they are making absolutely astronomical profits. While it is not what we are suggesting today, I believe we could actually have something even more radical, a banking system that runs on a not-for-profit basis. Is that such a crazy idea? We have institutions called the credit unions. It is possible.

It can be done. Lending, credit and financial institutions can be run on a not-for-profit and democratic basis. We do it with the credit union movement. However, we are not even asking for that.

The Minister of State has essentially no response on the vulture funds. Do they serve any useful function whatsoever other than to profiteer? The answer is "No". They have no useful function at all, but we do nothing about them. We let them crucify people. We take no action against them. Even if the Government will not do the 3% cap we are talking about, could we do something to stop the rampant profiteering? These institutions are charging interest rates well in excess even of those of the pillar bank lenders that are, let us remind ourselves, in the case of AIB and Permanent TSB still majority State-owned, that is, publicly owned.

It is a poor response from the Government. It is evidence that it is not just us saying it but that when push comes to shove, the Government goes with the interests of the banks, big business and corporate interests and ordinary people have to take it in the neck. That is not acceptable and it is why it seems we are not going to get justice for ordinary people, in this case mortgage holders, but also all the people affected by the housing crisis, the unaffordability of housing and the cost-of-living crisis unless we get rid of this Government and replace it with one that puts the needs of ordinary working people before the profits of greedy banks and vulture funds.