The Irish mortgage market is "dysfunctional", needs more competition and the State should try to attract more entrants, according to a new report.
The conclusions are contained in a study by the State's Competition and Consumer Protection Commission (CCPC).
The report has been published under a commitment contained in the Programme for Government.
The report calls on the Central Bank to develop a process to attract new entrants to the mortgage market.
It is also critical of the practice of banks offering cashbacks to new mortgage customers, which it said could represent a "sophisticated attempt to manipulate consumer behaviour".
New research shows that consumers can not properly assess these types of loan products and often make poor choices, the Commission's report states.
The report recommends that the CCPC and the Central Bank develop policies to protect consumers from these marketing practices.
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Noting that the conveyancing system is currently paper based, it says that authorities need to do more to encourage an electronic system.
This is a key factor preventing consumers from switching mortgage providers, it adds.
Despite advertising to encourage people to move mortgage providers and products, it says switching remains "stubbornly" low.
Today's report also says the repossession system should make greater use of suspended orders for possession of a home by a bank.
It says these orders incentivise borrowers who have not engaged to work with a bank on their mortgage arrears.
Isolde Goggin, Chairperson of the Competition and Consumer Protection Commission, said the scale of the mortgage market has far reaching implications for our economy and society as a whole.
"Our analysis shows that this market is currently quite dysfunctional from both a competition and a consumer perspective. The market we have is the legacy of the last 15 years of boom and bust and unfortunately there are no quick fixes to significantly increase levels of competition or consumer choice," Ms Goggin said.
For the report, the CCPC engaged in "extensive consultation and research" with various stakeholder groups including interviews with consumer representative groups, industry players (both domestic and internationally) and a public consultation.
The CCPC also said that a proposed law to hand the Central Bank powers to intervene in the mortgage market would likely make it less attractive for badly needed new mortgage providers.
The bill, proposed by Fianna Fáil to force banks to cut their mortgage rates, passed the initial stage in teh Dáil a year ago despite objections from the Government.
The legislation is now being scrutinised by a parliamentary committee where it has also been criticised by the Central Bank, which would be handed the new powers.
The European Central Bank and the European Commission have also opposed the bill.
The CCPC said that of the 20 banks, representative bodies and individuals who responded to their consultation, only three - Fianna Fáil, the Fair Mortgage Rates Campaign and an individual consumer - were in favour of capping interest rates.
Fianna Fáil's finance spokesman, Michael McGrath, said that the Finance Minister is consulting with the Attorney General on some legal aspects of the bill and he was awaiting feedback before proceeding.
