a regulator we recognise that consumers need availability and choice of products and services to meet their needs. the retail banking market needs to function effectively to deliver this. for banking as for other financial services, we see regulation, active consumer switching, innovation, transparency and competition, as being key to effective market functioning. interest rates and the irish mortgage market let me turn to the impact of interest rate rises on the irish mortgage market. part of the transmission of monetary policy – essential to ensure that inflation returns to target – is what we now see happening to mortgage rates. increases in the ecb policy rate are transmitted over time to households and firms'borrowing rates via the financial sector. lenders and credit servicing firms in ireland have increased rates on their mortgages in recent months. retail banks – who provide 84 per cent of all principal residence ( pdh ) mortgages – have to date increased fixed rates for new or switching customers, and have not increased their variable rates. non - bank lenders and servicing firms have raised variable rates, including some rates at the higher end of the market. and of course customers on tracker products have seen their rate increase automatically in line with the ecb rate. the impact of these rate increases on borrowers will depend on a combination of the rate increase itself and the financial and personal circumstances of the individual borrower, be they a private individual, a small business or a large corporate body. we have been clear with the firms we regulate that they need to be proactive in supporting their customers to navigate these changes. we will continue to engage actively with regulated firms on their approaches to increasing interest rates and managing the impact of inflation, and how they support their customers in line with the regulatory framework and our expectations. as you know, the same regulatory protections apply whether a borrower's loan is with a bank or with a non - bank lender or servicing firm. the central bank does not have a statutory role in approving the rates that mortgage lenders charge on their loans. these are commercial decisions for the lenders themselves but we do expect firms to : have the resources and arrangements in place to assess applications from existing and new or switching borrowers in a manner that is timely and based on prudent lending standards applied consistently across all applicants ; have fit - for - purpose arrangements in place to anticipate and deal with customers in or facing arrears. this includes cases where consumers may face arrears due to an increase in the interest rate on their

and overall economic activity as the year progresses. macro - financial environment 2 / 6 bis - central bankers'speeches there is no doubt that the macro - financial environment remains very challenging both domestically and globally. over the past twelve months many asset prices have fallen sharply, yields have risen, and market volatility has increased substantially. the fragility of certain markets and its participants – particularly in the non - bank financial sector – was made all too apparent by the gilt market disruption in the uk in september. the inflationary challenges are being experienced most acutely as shocks to people's real incomes and an erosion of their living standards. the profit margins of businesses, particularly the smaller businesses with less scope to pass on cost increases to customers, will suffer due to the size of their energy bills and other costs as well as falling revenues as customers reduce discretionary spending. taken together, these pressures have the potential to lead to an increase in repayment challenges for some borrowers. 3 overall, risks to the irish financial system have risen. however, there are a number of reasons to believe there is resilience in the system to meet these risks. while some mortgage customers are experiencing directly the effects of our interest rate decisions, there is substantial resilience across the mortgage market. lower levels of indebtedness, a gradual shift towards fixed rate borrowing, pandemic savings and substantial housing equity, are all ensuring that the mortgage market as a whole has significant capacity to absorb shocks. even in the sme sector, where cost increases will severely tighten profit margins for many, indebtedness has fallen continually for a decade, reducing the risk of macroeconomic spillovers between the financial sector and the real economy. regulatory priorities we continue to engage with the banking sector, other lenders, insurers and investment firms to ensure the financial system plays its proper role in supporting the economy and users of financial services. banks and other lenders in particular have a key role to play by : providing the lending and deposit services required to support a well - functioning economy ; supporting customers who may be experiencing difficulties in light of the changed macro - economic environment, including in particular customers in or facing arrears on existing loans ; and developing and implementing strategies which preserve long term sustainability and firms'capacity to continue to support the economy through this period and into the future. the financial sector continues to change rapidly, in particular through digitalisation and technological innovation. the entrance of new types of participants in the