The Financial Regulator is to report to Brian Lenihan regarding the plight of homeowners who wish to switch from a fixes rate mortgage to variable, a wish highlighted by last Thursday’s ECB interest rate cut.
Deputy John Deasy asked the Finance Minister if he plans to assist those who wish to switch to the variable rate “without incurring the present costs that these [financial] institutions are demanding”.
In a written reply dated May 6th, Minister Lenihan stated: “The Deputy’s question refers to the redemption fee applied by mortgage providers in circumstances that a customer seeks to break a fixed rate mortgage.
“Mortgage lenders in Ireland generally seek to recover costs of funds when a borrower with a fixed rate mortgage agreement seeks to terminate the agreement some time before the term agreed.”
The Minister continued: “On 26 March 2009, I undertook, in this House, to contact the Consumer Director of the Financial Regulator on the subject of customers who wish to switch from a fixed rate mortgage.
“On foot of that my Department has contacted the Financial Regulator to request confirmation that the redemption costs for switching from a fixed rate mortgage cover funding costs only and that there are no other costs included in these charges.
“The Financial Regulator has confirmed to my Department that it is looking into this matter and that it will revert shortly. I will advise the Deputy of the outcome of the Financial Regulator’s consideration of this matter.”