Fianna Fáil Finance Spokesperson Michael McGrath said he is becoming increasingly concerned at the government’s complete indifference to speculation that the banks are planning another round of variable rate mortgage hikes potentially affecting up to 300,000 customers.
Deputy McGrath was speaking following statements in the Dail this week during Finance questions and in written parliamentary replies by Minister for Finance Michael Noonan that the government will not seek to influence in any way decisions by the banks to further increase rates.
Deputy McGrath stated, “There is growing speculation that AIB is planning a further hike in variable mortgage rates and that this will spark another round of hikes by the other banks. Variable rate mortgage customers have become the sacrificial lambs as the banks seek to make up for losses elsewhere in their books.
“While the final decision on rates does rest with the banks at present, it is remarkable that the government is unwilling to even express a view on the matter given the impact of rate increases on mortgage arrears and the wider economy. Less than two years ago – fresh in office – the government took a much more hands on approach on at least one occasion when the banks were dragging their feet on passing on an ECB rate increase.
“Many analysts now believe that variable rates could reach 5% in the next year or so. On a €200,000 mortgage over 20 years, the difference in the monthly repayment between a customer on a variable rate of 5% and a customer on a tracker of 1.75% is a staggering almost €400. This pattern is completely unsustainable and is an issue government cannot continue to ignore. It is about time the government stood up for variable rate mortgage customers and made its views known to the banks on the prospect of further rate increases.”