Following publication of the latest Retail Interest Rates statistics by the Central Bank, Fianna Fáil Spokesperson on Finance Michael McGrath has said that, “mortgage interest rates charged in Ireland are entirely unjustifiable and the banks cannot be allowed to continue to fleece Irish consumers in this way.”
“The statistics show that the average interest rate on all new Irish mortgages agreed in May stood at 3.21%. The equivalent average for the euro area is only 1.8%. Ireland is the only country in the euro area with an average rate above 3%, with 10 of the 19 euro area countries reporting an average rate on new mortgages in May of less than 2%. This massive differential is impacting negatively on the quality of life of hundreds of thousands of individuals and families around the country.
“The truth is that neither the government nor the Central Bank have shown any interest whatsoever in this issue. Both seem happy to allow Irish mortgage holders and SMEs pay for the most expensive debt in Europe. The situation is made far worse when the interest paid on deposits is factored in. Interest rates on new household term deposits stood at 0.06% in May. The Central Bank’s data shows that the interest rate spread between loans and deposits is more than double what it was back in 2012.
“The recent decision by Ulster Bank to introduce a new 2.3% fixed rate has the potential to shake up the market but this will only happen if other market players follow suit and cut their rates. The Central Bank should remove ‘cashback’ incentives from the market as they simply camouflage high interest rates. The government needs to reconsider its opposition to legislation giving more power to the Central Bank to tackle high rates.
“A delegation from the Oireachtas Finance Committee will be meeting officials from the ECB in September and I have placed the issue of high mortgage interest rates on the agenda for discussion. I look forward to challenging them on this issue directly,” concluded McGrath.