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No Consent No Sale Bill Will Increase the Cost of Borrowing for Consumers

Banking & Payments Federation Ireland (BPFI) has very serious concerns about the impact on the mortgage market of the No Consent No Sale Bill 2019 proposed by Sinn Fein.  Contrary to claims made that the Bill will assist borrowers, the proposed measure will increase the cost of borrowing for consumers and will not provide any additional protection to borrowers.

This Bill will lead to a reduction in the availability of mortgages for borrowers.  It will make it harder for bank and non-bank lenders to raise funding which means they will have less money to give out in mortgages. This is because portfolio sales are a necessary and critical component of a lender’s ability to raise capital. With this option greatly diminished, if not closed off completely, lenders will have less money to lend and fewer people will be able to get the mortgage they need to buy their home.

This Bill will lead to an increase in the cost of mortgages for borrowers.  This is because the cost of funding will increase for lenders and they will have little choice but to increase the cost of mortgages for households. It is already comparatively expensive for Irish lenders to fund mortgage lending, and this Bill will make that situation worse.

In this regard we note the Competition and Consumer Protection Commission 2017 report, Options for Ireland’s Mortgage Market, which stated (p.99):

“Separately, from an investment perspective alone, it would seem reasonable that investors would be more reluctant to invest in a market where there is a problematic issue that has been identified but left unaddressed, or where there is the risk to the legislative or judicial predictability in repossession procedures.  If this were to happen in Ireland and policy makers failed to adequately address the current NPL issue through the introduction of a predictable, transparent and rules based process for resolving mortgage NPLs then it is conceivable that the additional risk perceived by investors could lead to permanently higher capital costs for Irish lenders and as a result interest rates would also be correspondingly higher.”

 This Bill will lead to less competition in the mortgage market.  It will make the Irish market less attractive to new lenders and could even cause existing lenders to exit the market altogether. The result would mean less competition and less choice for consumers than could otherwise be the case.

 This Bill will not add to the protections that existing borrowers have.  It is claimed that the Bill is necessary to provide protection to the borrower whose mortgage is sold by a lender to a third party.  The Bill is unnecessary in that respect.  The Central Bank has stated on many occasions that the existing protections which borrowers have travel with them on the sale of loans to third parties.  In other words, all the rights mortgage holders have with their existing lenders remain if the mortgage is sold to a third party.

Commenting on the Bill, Maurice Crowley, BPFI Acting CEO states:

“We have documented these concerns to the Oireachtas Committee on Finance, Public Service and Reform as part of the pre-legislative scrutiny process.  Given the serious implications of this legislative proposal for lenders and borrowers alike, we believe it critically important that BPFI is afforded the opportunity to meet with the Committee.  We have advised the Committee of our willingness to attend its meeting – having been approached by the Committee to do so.”

“The banking sector is but one of a number of stakeholders who have an important role to play in increasing the supply of suitable and appropriate housing.  To fulfil our role, we need all critical components of the mortgage market to be operating fully and effectively; and we need to strike a balance between the rights of borrowers to fair treatment and the rights of lenders to manage the risk they face in providing mortgages. This Bill does nothing of the kind.”


For Further Contact: Jillian Heffernan, Head of Communications, BPFI, ph: 01 474 8835 / 087 9016880

 Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.