Fianna Fáil Spokesperson on Finance Michael McGrath has welcomed a strong indication from the AIB CEO David Duffy at the Oireachtas Finance Committee this afternoon that the bank could reduce its standard variable mortgage rate ‘within the next month or two’ if present market trends continue.
Deputy McGrath stated, “The standard variable mortgage rates being charged by banks in Ireland on around 300,000 customers are completely unjustifiable. With falling cost of funds and rapidly rising net interest margins, the banks are extracting more and more profits from variable rate customers. Fianna Fáil has been to the fore in highlighting this injustice and in brining pressure to bear on the government, the Central Bank and the banks, to secure progress on the issue.
“The fact that the average interest rate on new mortgages in the euro area is 2.09% compared to a rate of well over 4% in Ireland underlines the extent to which banks are ripping off their variable rate customers. This must not be allowed to continue. The comments by AIB CEO David Duffy today are welcome and must be quickly backed up by a significant variable rate cut from the bank. AIB’s cost of funds at the end of last year was 1.57% and has almost certainly fallen further since then and the bank is earning massive margins on variable mortgages. Against that backdrop, variable rates of over 4% are exorbitant and unacceptable.
“Other banks such as Bank of Ireland and Permanent TSB, who both continue to charge a ridiculously high standard variable rate of 4.5% to their existing customers, must act swiftly on this issue. The campaign for fairness for standard variable rate customers in Ireland is gaining considerable momentum and will hopefully will result in savings over the coming months for those trapped paying excessive rates.”