Fianna Fáil Finance spokesperson Michael McGrath has today published the details of a Private Member Motion to be debated in the Dáil next week which will demand action to end what he is describing as the rip-off of tens of thousands of existing variable mortgage customers. Earlier this week Fianna Fáil published an analysis of the interest rates that are charged to existing customers on tracker rates, standard variable rates (SVRs) and those that are available to new customers. This showed a wide and growing disparity with existing customers on SVRs very much at the bottom of the pile.
Deputy McGrath commented “There are at least 300,000 households who are on standard variable rate mortgages. These families have benefited least from the current low interest rate environment in Europe. In fact they have watched in absolute frustration as their mortgage rates have steadily risen as rates generally have fallen. In essence they have been trapped in a situation which is costing them hundreds of euro a month. It is the number one issue affecting their household budget yet receives little or no attention from government.
“Our Dáil motion is three pronged. We want the government to engage directly with banks, particularly the state owned banks to emphasise to them the seriousness of the situation. The Government also need to play an active role in defining what a competitive banking landscape would look like in Ireland by publishing a white paper on the subject. 7 years on from the onset of the crisis our banks may be stabilised but we are a long way from a normal banking system.
“Secondly we want the Central Bank to step up to the plate and take a much more hands on role in consumer protection. Last year Governor Honohan implicitly accepted that mortgage rates for existing variable rate customers were going in the wrong direction in the context of record low ECB rates stating “It is reasonable to ask whether, having under-priced lending so badly in the early years of the millennium, they could end up over-pricing it now.” A peer review of the Irish Central Bank published this week indicated that the Central Bank needed to do more to protect the interests of consumers. Action in respect of existing variable rate customers would be a good point from which to start.
“Finally we believe the banks need to reflect on the reputational damage they are making to their own brands by treating a large group of their own customers in a discriminatory manner. They can address this by extending recent variable rate cuts for new customers to existing mortgage holders and also by improving their product innovation and making a greater range of switcher mortgage products available,” concluded Deputy McGrath.