Fianna Fáil Finance spokesperson Michael McGrath has described the response by the banks to the 1st of July deadline to reduce the cost of mortgages for variable rate customers as totally inadequate and as a rebuff to the Minister for Finance. Deputy McGrath has called for a stepping up of the campaign for mortgage fairness in Ireland.

Deputy McGrath commented, “The banks have dropped a few crumbs from their table. Despite the fact that variable rates in Ireland are more than 2% higher than the euro area average, the only bank to offer a straight cut in its variable rate has been AIB and this was in fact announced before its meeting with the Minister. PTSB has offered a change to its pricing which leaves it still charging 4.3% variable rate to borrowers above 90% loan to value. This is simply outrageous.

“In the case of Bank of Ireland and KBC, they seem to have regarded the process as little more than a marketing opportunity for their fixed rate products. They have made no change to their actual standard variable rate (SVR) of 4.5% despite the overwhelming evidence that customers are being ripped off. I am not aware of any response at all to date from Ulster Bank (SVR 4.3%) and ACC Bank (SVR 4.4%) to the 1 July deadline set by the Minister. In addition, Danske Bank customers continue to pay a staggering rate of 4.95% and 46,000 mortgage holders whose mortgages are held by non-banks (such as vulture funds and sub-prime operators) continue to pay dramatically over the odds.

“A fixed rate is not suitable for all 300,000 variable rate customers in the country. Signing up to a fixed rate restricts the ability of a mortgage holder to benefit from further improvements in bank funding costs or the entry of new competitors in to the marketplace. In my view, the banks have not met the test set for them by the Central Bank in their report on the mortgage market when they stated: “Greater transparency surrounding the variable interest rate policies operated by each bank would help in this regard.” If anything, the pricing process has been made more convoluted with KBC tying a reduction its rates to customer moving their current account the bank. As it stands, customers have been left bewildered as to why they are paying higher rates for their mortgages as ECB rates have fallen to record lows.

“Fianna Fáil believes a legislative framework is required to create a monitoring process for the level of competition in the mortgage market and the fairness of rates charged. This would act as a strong deterrent to banks from charging excessive rates and would only necessitate Central Bank action where the evidence points to a clear market failure. We have brought forward details proposals in this regard which will seek to have adopted by the Dáil,” concluded Deputy McGrath.