Borrowers struggling financially urged to contact their financial institution
Deputy Governor of the Central Bank, Monetary and Financial Stability, Vasileios Madouros has said borrowers who find themselves in financial difficulty or who expect they may experience financial difficulty should contact their financial institution.
In an interview with RTÉ News, the Deputy Governor said while the Bank expects ‘there will be increased financial distress’ it also believes households are in a much better position to absorb the cost-of-living shock and interest rate rises ‘relative to what we would have seen 15 years ago.’
“We are very focused on ensuring that lenders themselves proactively engage with borrowers and make sure they understand the impact of their decisions on those borrowers and make sure solutions are available to those who find themselves in financial difficulties,” said Deputy Governor Maduros.
When asked if the Bank would consider capping variable interest rate increases, the Deputy Governor said it would have ‘significant reservations’ about any intervention that might control pricing in the market. He also said this might hinder competition in the Irish market and would limit the ‘pass-through’ of monetary policy.
He said that ‘a very robust’ consumer protection framework exists under the Code of Conduct on Mortgage Arrears which applies both to banks and non-banks.
He said the Bank was ‘pressing lenders to make sure they engage with potential borrowers in financial distress to ensure that sustainable solutions are found.’
On the future path of monetary policy after the next ECB meeting in March where another half a percentage point increase in interest rates has already been signalled, the Deputy Governor said the ECB would focus on the available data at the time before its next move. He said the reason interest rates are going up is that inflation needs to be brought back down to its target rate of 2%.