Fianna Fáil Spokesperson on Finance Michael McGrath has said AIB’s announcement today of cuts to its fixed mortgage rate products of up to 0.45% will put pressure on other lenders to reduce their rates.

Deputy McGrath commented, “We had been told by analysts that the pressure on mortgage interest rates was on the up, so it is particularly welcome that AIB have changed some rates in a downward direction. It is up to others now to respond. We need real competition in the mortgage market and we need to see more people switching their mortgage from one lender to another.

“While this is welcome news, it is clear that much more needs to be done to ensure that mortgage customers in Ireland are treated fairly. Ireland still has among the highest mortgage interest rates in the Eurozone and we still have gimmicks like ‘cash back’ offers in use which are used to camouflage high rates.

“Separately, executives from Permanent TSB have confirmed to the Oireachtas Finance Committee today that some 35,000 of their mortgage customers are still paying a variable interest rate of 4.5%. This is despite the fact that all those customers are entitled to a reduction in their interest rate if they submit an up-to-date valuation of their property (which the bank will pay for).

“This follows on from the confirmation last week from Bank of Ireland that some 47,000 of their mortgage customers are entitled to an immediate rate cut if they move to a different product with the bank. Therefore, over 80,000 customers of Permanent TSB and Bank of Ireland are able to avail of a lower rate, even with their own lender. More needs to be done to bring this to the attention of the customers concerned. The Committee will continue its engagement with the remaining banks – AIB, KBC and Ulster Bank – and I am sure more similar examples will emerge.

“We need more competition between existing players in the Irish market and we need new market entrants. The introduction of Finance Ireland into the mortgage market is a welcome step in that respect but we also need plans by An Post to be advanced. It is also encouraging to see more Credit Unions move into the mortgage market in a more meaningful way. More competition leads to lower rates”, concluded McGrath.