Irish Banks are still dragging their heels on variable mortgage rates – Hayes
Banks have only reduced variable rates by less than half a percent in one year
Brian Hayes MEP today commented on recent figures from the Irish Central Bank which shows that Irish variable mortgage rates are still well above the Eurozone average.
“Irish consumers are still paying over the odds and getting less on deposits than consumers in the rest of Eurozone. The Central Bank released figures on Friday 14th October showing that for all new variable mortgages (excluding renegotiations), the average interest rate is 3.47%. The equivalent rate in the Eurozone is 1.87%. However, it is very welcome to see that today KBC is making reductions to its variable and fixed rate products with some rates as low as 2.9%. This is a welcome sign of healthy competition coming into the market. If they can move in this direction, then others can too.
“In September 2015, the Central Bank showed that the average variable rate in Ireland was 3.96%. This reveals that in the space of a year, Irish banks have only reduced their variable rates by 0.49%. This is particularly frustrating given that in March 2016 the ECB reduced its main interest rate to zero. This effectively shows that Irish banks are still dragging their heels on the variable mortgage crisis and this is having a hugely negative impact on mortgage holders.
“Moreover, it’s not only mortgages where consumers are getting ripped off – Irish banks are offering much poorer returns on deposits than their Eurozone counterparts. The average deposit interest rate in Ireland now is 0.15% while in the Eurozone it is 0.53%.
“There is the problem that tracker mortgages remain a drag on the profitability of Irish banks but this should not be a justification to give variable mortgage rate customers such a bad deal.
“Based on the Central Bank’s recent figures, Irish variable mortgage rates have on average remained between 3% and 4% since 2011. During this five year period, the main ECB interest rates has come down by 1.5%. The average rate for a variable mortgage in the Eurozone has come down by around 1.5% since 2011 which shows that other Eurozone banks are clearly linking their mortgages rates closely to the ECB interest rate. It is quite scandalous that Irish banks are not doing the same.
“I have regularly brought this issue up at a European level and I am glad to see the European Commission examining the possibilities of a cross-border market for mortgages. The European Commission recently conducted a consultation on ways to improve retail financial products in the single. The results of this consultation have recently been published and they show that half of banks and industry associations in the EU believe the more can be done to develop a cross-border market for mortgages in the EU.
“This means that an EU market for cross-border mortgages is becoming more and more likely. I am confident that new Commissioner for Financial Services Valdis Dombrobskis will examine possible ways in which obstacles to obtaining a cross-border mortgage in the EU can be removed.
“One way in which cross-border mortgages could become a reality is by using the French surety model where mortgage default risk is outsourced to insurance companies. This would help to get past the problem of insolvency risk which is seen as the main barrier to banks providing cross-border mortgages.”
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Dublin MEP, Brian Hayes has today (Sunday) said that it would be a mistake to reallocate the 73 British seats of the European Parliament to the remaining 27 member states following Brexit. Once the UK leaves the EU, the Lisbon Treaty makes it possible for the reallocation to take place after the conclusion of the negotiation.
“UK Prime Minister, Theresa May has said she will trigger the formal process of leaving the EU by the end of March next year. From the moment that Article 50 is triggered, the exit process should last no longer than 2 years, however it is possible to extend this through a unanimous decision of all EU Member States.
“The next European Parliament elections will take place in May 2019. Given the decision of the British people it would not make sense that British representation after 2019 should continue.”
“Under the Lisbon Treaty the number of MEPs cannot exceed 751, which is the current number of MEPs – including the UK’s 73 seats. There is no article in the Treaty that says we must have a minimum number of MEPs. The rules only stipulate the maximum and minimum number a Member State can have. Germany has the maximum amount of 96 while Malta has the minimum of 6.”
“If the reallocation of seats occurs ahead of the European Elections in May 2019, it has been reported that Ireland could gain one extra MEP seat. Having one extra Irish MEP, in a circumstance where larger member states gain significantly more MEPs, would not extend Ireland’s influence in Parliament. In fact having a smaller parliament may help to give us more influence.”
“The British seats should instead be reserved for future EU enlargement. I also believe there is a need to keep the number of seats consistent. Because of EU enlargement, the number of Irish MEPS has decreased over recent years. In 2004 Ireland elected 15 MEPs, in 2009 12 MEPs and in 2014 11 MEPs.
“Rather than increasing the number once again and then potentially decreasing it after the next phase of enlargement, it would be better to keep the number at 11 seats,” concluded MEP Hayes.
Hayes welcome Scottish Courts ruling on minimum unit pricing of alcohol
Fine Gael Dublin MEP Brian Hayes has today (Friday) welcomed the Scottish Courts judgement upholding Scottish plans to introduce minimum unit pricing of alcohol. The drinks industry had previously challenged through the Scottish Courts plans to establish a minimum price per unit of alcohol.
“Today’s judgement is very much welcome. EU Member States must be allowed to enact legislation in the interests of public health. The judgement now paves the way for Ireland to introduce it’s minimum unit pricing of alcohol legislation.”
“Minimum pricing will set a floor price for alcohol. It targets the products that are currently very cheap but have a high alcohol content. Minimum pricing has successfully been introduced in a number of provinces in Canada and has had a positive impact.” Concluded MEP Hayes.
Hayes welcomes Commission’s new 2-step approach on CCCTB
Brian Hayes MEP welcomed the fact that the European Commission will shortly release a new package on CCCTB but said that consolidation of a common tax base is a step too far. The Commission is planning to publish their re-launched CCCTB package next week which includes a 2-step approach, which will firstly focus on developing a Common Corporate Tax Base (CCTB) and secondly adding the consolidation element.
“The Commission’s two step approach to CCCTB is the right approach. It is welcome that the Commission will finally re-launch an initiative on CCCTB but several concerns remain. We should be ready to engage with other Member States and the European Commission on a Common Corporate tax base (CCTB). A Common corporate tax base has the potential to address tax divergences in the EU but it must be in line with the OECD BEPS principles.
“Consolidation of the tax base, however, is a bridge too far and effectively represents wide-scale tax harmonisation through the back door. Consolidating a multinational’s profits across its entities in different Member States according to a complex formula is not the way to proceed. This cuts across how Member States set their tax rates and policy and is a roundabout way of addressing cross-border tax losses.
“We cannot underestimate the challenge of getting agreement on the Commission’s new proposal. This is going to take a long time. It failed on one occasion already but there is an onus on the Commission now to understand the concerns that various Member States had during the first CCCTB attempt and address these issues.”
Published in the Irish Daily Mirror 17th October 2016
Ireland’s voting weight at the European Council could suffer serious setback after Brexit – Hayes
Brian Hayes MEP today said that Ireland’s voting weight within the European Council could be hit badly with the loss of the UK as a key ally.
“The European Council is subject to Qualified Majority Voting (QMV) rules whereby two conditions must be met for a legislative proposal to pass – this is known as the ‘double majority’ rule. Under QMV, 55% of Member States and a 65% representation of the total EU population is required to pass a vote in the European Council. In practice, the 55% means that 16 out of 28 Member States need to approve legislation in the Council for it to pass and those 16 states must represent more than 65% of the EU’s population.
“The ‘double majority’ rules were brought in through the Lisbon Treaty to bring the voting weights closer to population size. According to these QMV rules, a blocking minority to a proposal can be formed either through an alliance of 12 Member States or an alliance of Member States representing more than 35% of the EU population.
“The loss of the UK will raise a number of interesting and challenging issues. For Ireland, the UK’s eventual departure represents not only the loss of a key ally at the Council table but also a loss of a 12% of the EU’s population, a sizeable voting proportion. The key question is: who will Ireland depend on to form a blocking minority into the future?
“Research has shown that the loss of the UK will favour a more southern protectionist bloc of countries which includes France, Italy and Spain over the Northern liberal bloc of countries which includes Ireland, Sweden and Netherlands. The ability of Ireland to form blocking minorities without the UK as a big Member State will be much more difficult into the future. Ireland has always counted on the UK’s population size of 12% which can fill a big chunk of the 35% population blocking minority.
“Although about 80% of Council decision are passed through consensus, in areas which are key for Ireland such as financial services or single market harmonisation, we could be left very exposed.
“The other question we have to ask ourselves about the new voting regime into the future is whether or not there should be a Treaty change? Any change to the QMV system will formally require a Treaty change but there will be massive resistance to a Treaty change and certain Member States will want to keep the current system in place. But we have to ask ourselves, will the UK’s departure cause such a significant shift in the voting balance that a Treaty change will be needed to make the system fairer?
“The voting system in Council should ultimately give smaller Member States the ability to protect their rights. The loss of the UK hands more power to a small number of big Member States. Ireland needs to look closely at the balance of construction of QMV in a post-Brexit world and assess whether the right safeguards are there for smaller Member States.”