It follows yesterday's revelation that the scheme has essentially ran out of funds.
Deputy McGrath said the insurance rule is typical of the red tape and bureaucracy that plagues the loan scheme, and is an affront to consumer rights as they are unable to shop around for the best value.
"Local authorities are specifically exempt from the provision in the Consumer Protection Code 1995 which allows borrowers to source such a policy from whomever they choose," commented McGrath. "While the Minister says that the nominated insurer has won a competitive tendering process, there have been claims that some borrowers would be able to access mortgage protection insurance at better rates elsewhere.
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"The current rate for mortgage protection insurance under the RIHL scheme is 0.55%. Given the average loan amount for all applications to date is €188,924, the estimated average monthly repayment for mortgage protection insurance is €87.38. Offering a single group rate to encompass the circumstances of all borrowers almost certainly means that some borrowers are paying over the odds.
"Following yesterday's shambolic developments, the government needs to ensure that additional funding is provided for the continuation of the RIHL scheme but they should also remove unnecessary bureaucracy and allow consumers to shop around for the best value for products such as mortgage protection insurance cover," Deputy McGrath concluded.
(JG/MH)
