Fianna Fáil Finance spokesperson Michael McGrath has welcomed today’s move by AIB to reduce standard variable mortgage rates by 0.25% but has said more needs to be done to reduce the rip-off variable rates customers are facing. In particular, Deputy McGrath said the focus will now very much centre on the country’s largest financial institution, Bank of Ireland and its failure to reduce its 4.5% standard variable rate.

Deputy McGrath commented, “I welcome today’s announcement which will benefit both owner-occupier and buy-to-let mortgage holders on a variable rate with AIB, EBS and Haven. Over recent months, since Fianna Fáil put it firmly on the political agenda, a head of steam has built up on the issue of excessive standard variable rates being charged to 300,000 variable rate mortgage customers throughout the country. AIB should now make it clear that it is willing to aggressively win over mortgage customers from other banks.

“Today’s announcement represents the third cut to standard variable rates by AIB since October last year. In the same period, Bank of Ireland has stuck rigidly with an indefensible and unjustifiable variable rate of 4.5%. It has instead tried to force existing customers to lock into a two year fixed rate. Reducing the fixed rate is not a substitute for reducing the standard variable rate itself.  Its website loudly proclaims, “At Bank of Ireland we’re determined to make the mortgage process as easy as possible.” Existing variable rate customers will find this difficult to swallow as they have not seen any benefit in terms of reduced monthly payments despite the overwhelming evidence that they are being ripped off. The Minister for Finance’s efforts to date have failed and he has been effectively snubbed by Bank of Ireland despite the State’s 14% shareholding in the bank.

“If Bank of Ireland persists in refusing to reduce its variable rate, then the case for legislation becomes even more overwhelming. Fianna Fáil has brought forward a Bill which balances the obvious need for banks to be profitable and the rights of consumers to be treated fairly. The Central Bank would be given responsibility for monitoring the level of competition in the mortgage market and the fairness of rates charged. This would act as a strong deterrent to banks from charging excessive rates and would only necessitate Central Bank action where the evidence points to a clear market failure. It would empower the Central Bank with a range of tools to influence the standard variable rates charged,” concluded Deputy McGrath.