Fianna Fáil Finance spokesperson on Finance Michael McGrath has welcomed today’s move by AIB to reduce standard variable mortgage rates by 0.25% but has said much more needs to be done to reduce the rip-off variable rates being charged by banks in Ireland.
Deputy McGrath also pointed out that today’s statement from AIB makes to reference to reducing the variable rates charged on SME loans.
Deputy McGrath stated, “Today’s move by AIB is to be welcomed as a modest step in the right direction. On behalf of Fianna Fáil, I have been highlighting for quite some time the excessive variable interest rates being charged by the banks in Ireland. I hope now that this move by AIB will trigger a round of variable rate cuts across the banking system.
“The ECB’s main refinancing rate stands at a historic low of 0.05% following a series of rate cuts. While the customers of Irish banks on tracker products have benefitted directly from these rate reductions, others have been denied the benefit of the rate cuts. SMEs, variable rate mortgage holders and other personal borrowers continue to pay interest rates in Ireland that are dramatically out of line with other eurozone countries.
“While the Irish government can access new borrowing at cheap, attractive rates of interest, the same cannot be said for the customers of Irish banks. The average interest rate being charged in the euro zone for new residential mortgages is 2.64%. The Central Bank’s claim that the rate for new mortgage lending in Ireland is 3.15% is deeply misleading as it includes the restructuring of existing tracker mortgages. In truth, a new mortgage holder in Ireland can expect to be paying between 4.25% and 4.5% depending on loan to value.
“I look forward to engaging with the banks on these and other issues when they come before the Oireachtas Finance Committee shortly.”