The prospect of standard variable rate mortgages rising to between 5% and 6% over the medium term will send shivers down the spine of thousands of AIB customers, according to the Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath was responding to comments made by AIB CEO David Duffy at today’s Oireachtas Finance Committee meeting to the effect that variable rates could reach 5% to 6% over the medium term.
Deputy McGrath stated, “Over the past number of months, the standard variable rate (SVR) charged by AIB has increased by a full 1% to 4%, increasing the monthly repayments very significantly for thousands of the bank’s variable rate customers. 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 6% over the period ahead is a truly frightening one for many borrowers currently in arrears or already struggling to make their existing monthly repayments. In documentation supplied by the bank in advance of today’s meeting, AIB 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. This is not a luxury the government can afford any longer. Increasing variable rates further will send more customers into mortgage arrears, will further depress the domestic economy and will delay this country’s overall economic recovery.”