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Vulture funds

Taoiseach says he didn’t realise his mortgage could be sold on by his bank when he took it out in 2003

In an interview with this week, the Taoiseach said he understood the intent behind Sinn Féin’s No Consent No Sale Bill.

TAOISEACH LEO VARADKAR has said when he took out his mortgage he didn’t know it could be sold on by his bank.

In an interview with this week, the Taoiseach said he understood the intent behind Sinn Féin’s No Consent No Sale Bill. 

The proposed legislation aims to give mortgage holders the power to block the sale of their mortgage bank loans to vulture funds.

The Dáil voted by 80 votes to 45 to pass the Bill – the government opposed the proposed legislation. The issues relating to the legislation were teased out yesterday at the Oireachtas Finance Committee. 

Varadkar told

“When I took out my mortgage back in 2003 or 2004 I didn’t actually realise that that could be sold on by the bank to another lender, so I can understand people’s genuine concerns and fears when that happens, when they get a letter in the post saying that your loan now belongs to someone else.”

However, like Finance Minister Paschal Donohoe and the Central Bank who have flagged concerns about the legislation, the Taoiseach also has reservations. 

“The difficulty with the Sinn Féin Bill is the advice we have from the Central Bank, which is independent… is that if we pass this legislation, while it might give a few hundred people or a few thousand people reassurance, it could do real harm in terms of interest rates and in terms of credit availability,” he said, adding that there are 600,000 people who pay a mortgage.

“Some of them struggle to make those repayments but they make them and it could make their interest rates to rise and then there are tens of thousands people in Ireland who are looking to get a mortgage for the first time and it might make it harder for them to get credit. So you have to bear in mind the greater good on these things.”

The issue of whether interest rates would rise if the Bill is passed was a matter of debate at a recent Oireachtas committee, in which Assistant Secretary for the Department of Finance Gary Tobin and Deputy Governor of the Central Bank of Ireland, Ed Sibley attended. 

Higher mortgage rates?

In an exchange between Doherty and Tobin, the assistant secretary told committee members that the Bill “is likely” to result in higher rates. 

It was pointed out to the assistant secretary that his department made similar predictions about Fianna Fáil’s Michael McGrath’s Bill – which sought to regulate vulture funds – and these predictions have not become a reality. 

At first, the government was opposed to the Fianna Fáil Bill, but it later backed it and the Bill became law last year. Interest rates did not rise.

“All we can do is tell you what we think might happen,” said the assistant secretary general.

Doherty said six months after the enactment of the McGrath Bill, none of the department’s warnings about higher interest rates have come to pass – if anything, the opposite has happened, he said. 

Speaking to this website, Varadkar said those who have their home loan sold on to vulture funds have the same protections.

“What I would like to say to people, is that even if your loan is sold on you have nothing to worry about if you continue to make the repayments and even if you are not all the consumer protections still apply,” he said. 

However, politicians such as Fine Gael Senator Kieran O’Donnell has questioned such statements, adding that vulture funds are in the loan business short-term, while established banks lend for lifetime mortgages spanning 35 years. 

When asked if he would prefer his mortgage to be with a mainstream bank or a vulture fund, the Taoiseach said:

I know it wouldn’t make a difference because first of all I am meeting my repayments and I do know that even if I wasn’t because of changes that we have brought in as a government all the same consumer protections would apply.

Finance Minister Paschal Donohoe previously told that he would not mind if his mortgage was held by a vulture fund. 

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