The Central Bank would have temporary powers to impose a maximum cap on variable mortgage interest rates under new legislative proposals tabled by Sinn Féin.

Later this week the Dáil will debate the party’s Private Members’ legislation, the Central Bank (Mortgage Interest Rates) Bill 2015.

The proposal is being brought by the party's finance spokesman, Pearse Doherty, as a response to the current levels of variable interest rates being levied by banks on home owners.

Mr Doherty has said they are among the highest in Europe and are running at twice the ECB rate. He said the measures proposed in the Bill would allow the Central Bank set a maximum rate of mortgage interest for an individual bank for a period not exceeding 12 months.

Sinn Féin has said the Government’s response to the level of interest rates has not been adequate to date and is unlikely to have any impact before the general election.

Under the proposed legislation the Central Bank would have new powers to set out the maximum rate of interest that any of the five covered financial institutions could charge.

Mr Doherty emphasised that an important part of the Bill was that the direction would lapse after 12 months. He added that a bank affected by such an order could apply for a review after six months. This would cover eventualities such as a rise in the cost of money on wholesale currency markets.

Mr Doherty said the Bill had been born out of the party’s frustration with the lack of downward movement on variable interest rates. “We believe it’s an exceptional measure, but one that is needed as the standard variable rates here are almost double what they are across Europe,” he said.

Mr Doherty said the maximum rate could only be imposed in certain circumstances after the Central Bank had examined a number of criteria, including the profits of the banks, the size of the institution, its interest rates and ECB interest rates.

He was aware the Central Bank did not want the powers but “it wants the banks to reduce interest rates”. He said such rules were in place for credit unions, which cannot lend at a rate above 12.5 per cent, as well as for money lenders, who are subject to individual maximum rates.