The Minister for Finance must insist on much more progress from the banks on variable mortgage interest rates during a planned series of meetings with them in September, according to the Fianna Fáil Spokesperson on Finance Michael McGrath.
Deputy McGrath was speaking following the publication by the Central Bank of the June Retail Interest Rate Statistics for June 2015 which shows that variable rates in Ireland remain at twice the level of the euro area. He said insufficient progress has been made on the issue of excessive variable mortgage rates and Fianna Fáil would continue to press the issue when the Dáil returns next month.
Deputy McGrath commented, “Despite the spin from government, the harsh truth is that up to 300,000 existing variable rate mortgage customers are still paying dramatically over the odds for their mortgage. Even after the series of meetings held between the Minister and the Banks in May, the variable rates being charged to existing customers is as follows:
- Bank of Ireland 4.5%
- Permanent TSB 4.3% (for customers with less than 10% equity)
- Ulster Bank 4.3%
- KBC 4.3% (if you move your current account to them)
- AIB 3.65% (from 1st October)
- EBS 3.70% (from 1st October)
- ACC 4.4%
- Danske 4.95%
“Other non-Irish banks and US private equity funds now holding Irish mortgages also continue to charge between 4% and 5% on variable rate mortgages despite the incredibly low interest rate environment at present. Banks will point to new offers on fixed rates and loan to value products but the truth is these products are only suitable for certain customers. The variable rate mortgage product – as a product in itself – should be priced competitively and appropriately by each bank and this is simply not happening.
“Minister Noonan has promised to meet the banks again in September prior to the Budget. He shouldn’t be fooled by press statements from the banks into thinking that great progress has been made on variable interest rates. Sadly, progress has been minimal. As soon as international interest rates begin to rise, I don’t believe the banks will need to be asked twice to hike up their variable rates. Fianna Fáil remains of the view that legislation is required to give the Central Bank the power to intervene when a market failure has occurred as is the case presently in the mortgage market.
“The continuing rip-off of variable rate customers comes against the looming abolition of mortgage interest rate at the end of 2017. This relief, which by definition, is of most benefit to those paying the highest interest rates, currently gives an average annual benefit of €850 to 325,000 families.”