The prospect of standard variable rate mortgages rising to between 5% and 6% over the next few years would be a disaster for hundreds of Waterford families that bank with AIB, according to the Fianna Fáil Cllr Michael J O’Ryan.
Cllr O’Ryan was responding to comments made by the AIB this week suggesting that variable rates could reach 5% to 6% over the medium term.
Cllr O’Ryan commented: “Over the past number of months, the standard variable rate (SVR) charged by AIB has increased by a full percentage to 4%, increasing the monthly repayments for hundreds of Waterford families very significantly. These rate increases have come at a time when the ECB has held its base rate at 0.75%.
“The suggestion that variable rates could reach as much as 6% over the period ahead is a truly frightening one for many Waterford families that are currently in arrears or already struggling to make their existing monthly repayments. AIB has confirmed its cost of funding is 2.79% and the bank is hoping to reduce this further. I cannot see any justification for the bank seeking to increase its variable rate any further.
“The government has been a passive bystander in recent months as the banks have increased their variable rates to the detriment of Waterford mortgage customers. This is not a luxury the government can afford any longer.
“AIB customers have also been hit by closures to bank branches in Kilmacthomas and Tallow. AIB is wholly owned by the Irish people and I find it extraordinary that tax payers are footing the bill for the mismanagement of bank.
“Increasing variable rates further will send more Waterford customers into mortgage arrears and it will further delay this country’s overall economic recovery. Growth forecasts for the economy will also be affected and this will only serve to compound the financial problems for struggling families in Waterford.”