The State’s consumer protection body has fired a warning shot across the bows of banks that use cashback deals and loyalty discounts to compete for mortgage customers.
However, in a lengthy report into the sector, the Competition and Consumer Protection Commission (CCPC), which is chaired is Isolde Goggin, effectively found that banks’ difficulty repossessing homes after a default is a significant factor in the high cost of Irish credit. The report was commissioned because mortgage interest costs here are the highest in Europe.
Among its findings, the CCPC warned that cashback deals that hand borrowers back a fixed percentage of their total mortgage at the start of the loan have become increasingly common, along with interest rate discounts for customers who move current accounts when they get a loan. While the report said the deals could be seen as competitive behaviour by lenders, the effect can be bad for customers.

“It could be argued they represent a sophisticated attempt to manipulate consumer behaviour.
“The work of Pricelab detailed in the analysis earlier shows that consumers cannot properly assess these type of loan product and often make poor choices.”

It said that without a “clear stated vision” there is a danger the housing and mortgage markets will again put the solvency of the banking system at risk and impact the economy.

It called for changes including actively encouraging new players, a shift to more fixed rate loans and clearer pricing.
But the report also blamed high levels of default here for driving up costs.

“This means that more bank capital is needed to write a mortgage in Ireland, and as a result a loan is more costly.”
While not calling for a ramp up in evictions, the CCPC said the courts could issue “suspended” possession orders that can be triggered if defaults reoccur, rather than let legal cases roll-on, and wants an interdepartmental working group to consider changes to repossession policy.

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