As speculation mounts of a further ECB base rate cut on Thursday of this week, the majority of banks with mortgage customers in Ireland have disgracefully refused to pass on last month’s 0.25% interest rate reduction to their standard rate customers, according to Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath stated, “In announcing the ECB rate cut last month, the bank’s President Mario Draghi cited weak economic growth in the euro and risks surrounding the economic outlook remaining on the downside as reasons behind the historic decision to reduce the rate to 0.75%. The import of Mr. Draghi’s comments was clear – the ECB rate reduction was intended to be passed on to customers and, as a consequence, to give a boost to the eurozone economy.
“The most effective boost to the Irish economy at the present would be if hard-pressed mortgage holders had more money in their pocket to spend in the domestic economy. While tracker rate customers received the benefit of the rate cut immediately, only two banks in Ireland passed on last month’s rate cut to their standard variable rate (SVR) customer as follows:
· AIB – No (increased their SVR by 0.5%)
· Bank of Ireland – No
· Ulster Bank – Yes
· Permanent TSB – Yes (reduced their SVR by 0.35%)
· National Irish Bank – No
· KBC Bank – No
· EBS – No
· Halifax / Bank of Scotland – No
· IBRC (Irish Nationwide) – Yes
“Of the State-owned banks, AIB, Bank of Ireland and EBS (which continues to operate as a separate brand within the AIB group). Indeed, AIB actually put their rate up by 0.5%. The only State-owned institutions to pass on the rate cut were IBRC and Permanent TSB (who reduced their rate by 0.35% but were coming from a high base).
“The silence from Government on the failure of three of the State-owned banks to pass on the rate cut to mortgage-holders has been deafening. At a time when variable rate customers expect their Government to act in their interests, Ministers have sided with the banks. The Government has essentially stood over a situation where variable rate customers have been thrown to the wolves by the banks and will presumably allow this to happen all over again if the ECB does decide to further reduce its rate on Thursday.”