Senator Robbie Gallagher has backed Fianna Fáil Spokesperson for Finance, Michael McGrath in stating that “cash back’ offers should not be allowed in the mortgage market and lenders should be forced to compete on interest rates.
“Banks are taking advantage of the lack of switching in the mortgage market by charging higher rates than are justifiable. The Central Bank’s Consultation Paper on Transparency and Switching in the mortgage market is a welcome step in the right direction and needs to be backed up with practical actions to make switching mortgages or mortgage providers easier and less hassle for people,” he said.
“The Central Bank is now acknowledging that promotional offers like cash backs are a serious issue. It would be far better and fairer for consumers if lenders competed on interest rates rather than gimmicks like ‘cash back’ offers. Often, the consumer pays many times over for the “cash back” by paying a higher rate of interest for the entire duration of the mortgage,” he said.
“Also, as the Loan to Value (LTV) ratio of a mortgage falls, people should be able to benefit from the lower interest rate attached to that LTV. However at the moment this is not the case with all lenders. Some people are locked in to paying the higher interest rate associated with the LTV they had when they first took out the mortgage. This is deeply unfair and needs to be changed,” he added.
“Fianna Fáil will be making a submission during this consultation period and we look forward to seeing workable and practical measures implemented that make it easier for mortgage holders to switch and help them to get a better deal on their mortgage,” he concluded.