Fianna Fáil Spokesperson on Finance Michael McGrath says the financial results and trading statements of banks this week brings the need for interest rate reductions for standard variable rate mortgage customers into sharp focus once again.
Deputy McGrath commented, “I note with interest that AIB has confirmed today that its net interest margin has increased by 16 basis points to 2.08% ‘due to lower funding costs and stable asset yields’ and ‘with continued expansion expected’. In other words, the bank continues to increase its profit margin on its loans to customers. While AIB has reduced its variable rate on a number of occasions, I believe more progress is required in an environment where the bank is accessing funds at historically low cost.
“While Permanent TSB is clearly not in as strong a financial position as AIB, it is interesting to note the bank’s cost of funds is now as low as 0.77% and the core bank’s net interest margin has increased to 1.75%. Existing standard variable mortgage customers continue to pay well over the odds on their mortgage in Ireland. Some banks, such as Bank of Ireland, have not moved at all on their standard variable rate and continue to charge ridiculous variable rates as high at 4.5% at a time when they are paying little or nothing for funds.
“In May, a Fianna Fáil Bill to give the Central Bank the power to tackle the issue of excessive variable rates passed second stage in the Dáil. I expect the government to facilitate the taking of committee stage of this Bill in the autumn so that its provisions can be enacted as quickly as possible. It is vital that further downward pressure is applied to variable mortgage rates. I will be writing to Minister Noonan seeking an assurance that the government will cooperate in moving this Bill through the various remaining stages in the interests of consumers who continue to be taken advantage of by their bank”.