Lenders say law ‘will push up mortgage lending rates’
LEGISLATION to regulate the sale of mortgages to vulture funds will push up interest rates on home loans, the Banking and Payments Federation said.
And the No Consent, No Sale bill will also make it harder for banks to raise finance to fund mortgage lending.
This will constrain the amount they have available to lend to consumers, the banking federation boss said.
The Banking Federation has not put a figure on the likely rates rise, but mortgage broker Karl Deeter estimates the legislation would add €1,500 to €2,000 a year to the cost of servicing a mortgage for a typical first-time buyer.
He said mortgage rates here, which are the second-highest in the eurozone, would rise by between 0.5pc and 1pc.
The Banking Federation said the legislation would deter new entrants from coming into the mortgage market which would limit the choice for borrowers.
The bill has been promoted by Sinn Féin’s Pearse Doherty and would require the specific consent of a borrower before the sale of a mortgage to a third party.
Banking and Payments Federation CEO Maurice Crowley said the bill would have unintended consequences, particularly for those taking out new mortgages.
He accepted that people have a negative view of the banks, but insisted the legislation would be harmful for consumers, pushing up lending rates, restricting borrowing and discouraging new lenders entering this market.
“People might have a jaundiced view of the banks and we can appreciate that, but the more analysis we do the more we have concerns from a consumer perspective.”
Mr Doherty responded that the banks were “scaremongering”. He said every time legislation is proposed to protect consumers the banks claim interest rates will rise, but this has not happened as they claimed.
He claimed that it would still be possible for banks to securitise mortgages to raise funds.
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