Tens of thousands of mortgage holders are not claiming a reduction in their mortgage interest rate which they are entitled to avail of immediately and without any cost to themselves, according to Fianna Fáil Spokesperson on Finance Michael McGrath.
Deputy McGrath was speaking following a series of Oireachtas Committee hearings with the banks in the past week.
Deputy McGrath commented, “A huge number of mortgage holders are paying more than they need to for their mortgage every single month. For example, some 45,000 Permanent TSB (PTSB) customers are paying a standard variable rate of 4.5% despite being able to secure an immediate reduction – even if they are in negative equity – if they apply for the bank’s ‘Managed Variable Rate’.
“Every single one of those 45,000 PTSB customers can secure a rate reduction by submitting an up-to-date valuation of their home (from an approved panel of valuers) which the bank will pay for. The minimum rate reduction is 0.2% but could be as much as 0.8% depending on the loan to value ratio. It is hard to fathom that just one in three of those eligible for a rate cut from PTSB have sought one.
“Some 42,000 mortgage customers of KBC Bank (half the bank’s mortgage customers) continue to sit on a standard variable rate of 4.25% (less a discount of 0.2% if their current account is with the bank). Again, depending on their loan to value ratio, they could secure a rate as low as 3.2% on submitting an up-to-date valuation of their home. I have no doubt a large number of these 42,000 KBC variable rate customers are paying more than they need to.
“AIB also confirmed to the committee that some of their customers may be able to secure a reduction in their interest rate by providing evidence that the ratio of the value of their home to the amount outstanding on their mortgage has fallen.
“Another cohort of customers of some banks could avail of a cut in their mortgage rate by moving to a fixed rate – though they need to be aware that involves moving to a different product with terms and conditions attached. Bank of Ireland’s strategy, for example, is to keep a high variable rate and offer better fixed rates.
“I and my colleagues in Fianna Fáil will continue to fight the battle for fair mortgage rates for all Irish customers. We would encourage those who are entitled to a rate reduction to claim it immediately. Otherwise, the banks are going to continue to benefit from the fact that many of their customers are paying a lot more than they should be.”