Davos 2023: Consumer advocates fear rate hikes could push vulnerable borrowers into deeper trouble
Mr McGrath noted that many of the borrowers in question are unable to switch to active lenders offering lower rates because of poor credit histories. The fear among consumer advocates is that a raft of standard variable rate hikes by service providers used by investment funds – or what are often referred to as “vulture funds – in the wake of European Central Bank rate increases since July will push many borrowers into deeper trouble.
A Bill published by Mr McGrath in 2016, when in opposition, aimed at giving the Central Bank the ability to cap variable rates did not progress through the Oireachtas. Mr McGrath, who took over as Minister for Finance last month, signalled, however, that he is not supportive of a Labour Party Bill introduced last summer that is similar to the one he previously championed.
Meanwhile, Mr McGrath is continuing to sell AIB shares on the stock market, after his predecessor Paschal Donohoe cut the State’s stake from 71 per cent to 57 per cent last year. However, he said that it would “require political discussion” among Government parties before he crosses the key 50 per cent threshold, which he expects to occur “in a number of months’ time”.
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