Interest rate hikes would cause significant harm in Irish mortgage market - MEP Kelleher

Fianna Fáil MEP Billy Kelleher has said that he is deeply concerned at reports of potential European Central Bank (ECB) interest rate rises and that such increases would cause significant harm to borrowers and mortgage holders, and indeed the wider Irish economy.

Kelleher was commenting after it was reported that following interventions from the German ECB member, interest rate rises are being considered to deal with the inflation crisis that has gripped the EU since mid-2021 and as a debate on the ECB annual report was taking place in the European Parliament.

“Interest rate rises are one of the primary economic levers that central banks can use to slow down inflation. However, such rises could have a dramatic effect in Ireland.

“Irish interest rates for mortgages are already over twice the EU average. Any rise in the ECB rate could result in highly damaging rises in interest rates by the Irish banks," added the Renew Europe ECON member.

“Supervisory authorities must revisit their capital requirements for Irish banks. The current requirements are incredibly onerous and force banks to charge high interest rates for consumers. We must get a commitment that these requirements will be revisited.

“Irish banks are fundamentally different businesses to the banks that were bailed out by the Irish people. We cannot ask the Irish people to pay on the double through punitive interest rates. 

“Inflation is a major issue. It is causing economic hardship for all citizens, but especially for those on lower incomes. However, adding fuel to the fire by increasing the cost of credit which would be the result of an interest rate rise is not what is needed.