Fianna Fáil Finance Spokesperson Michael McGrath has called on the Minister for Finance Michael Noonan to proactively engage with management at Permanent TSB to bring its interest rates into line with market rates.
Deputy McGrath commented, “Despite their recent interest rate reduction, state-owned Permanent TSB is still charging a Standard Variable Rate of 5.19% – that’s over 2% higher than another state-owned bank AIB (3.04%). In a normal functioning market, customers would be able to switch to another lender offering a more competitive rate. However, due to negative equity and lack of credit, Permanent TSB customers are effectively trapped in expensive mortgages, adding hundreds of euro to their monthly repayments in many cases.
“The exorbitant standard variable interest rate being charged by Permanent TSB has been highlighted for the past number of weeks on the consumer advocacy website www.askaboutmoney.com
“In the case of a family with a €250,000 mortgage over 25 years, the annual repayment on a Permanent TSB standard variable rate mortgage is €3,582 more than AIB. That’s an extra €300 per month because of the higher interest rate being charged. Over the lifetime of the loan, this mortgage-holder would end up repaying €90,000 more than an AIB customer for example. This is an unacceptable differential which must be addressed. I have raised this issue with Minister Noonan in the Dáil but to no avail thus far.
“Minister Noonan made much of persuading AIB to reduce their Standard Variable Rate by 0.25% in November following the first of the recent ECB rate cuts. However, the Minister continues to allow Permanent TSB charge a crippling standard variable rate.
“It is not acceptable that Permanent TSB be allowed to continue to charge an interest rate that is significantly out of line with other financial institutions in the market. Minister Noonan must now robustly engage with Permanent TSB to ensure that its standard variable mortgage rate is reduced without further delay.”