The decision of Bank of Ireland and ICS Building Society to increase all variable mortgage rates by 0.5% is further evidence that the banks regard variable rate customers as an easy target to make up for losses incurred elsewhere, according to Finance Spokesperson Michael McGrath.
Deputy McGrath stated, “The news today that existing variable rate customers of Bank of Ireland and ICS Building Society will be charged 0.5% more on their mortgages will come as a serious blow to thousands of customers already struggling to meet their mortgage repayments. Far from passing on the last ECB rate reduction in July, the two pillar banks have now moved their variable rate in the opposite direction – increasing still further the gap between the rate paid by tracker customers and by variable rate customers.
“Today’s announcement will certainly lead to more mortgage holders slipping into arrears. In a recent report on Variable Mortgage Rate Pricing in Ireland, the Central Bank noted that ‘It appears that some lenders are charging higher variables rates to compensate for the losses they are making on their tracker loans… ‘A risk with such a strategy is that it may be counterproductive and continue to exert upward pressure on arrears.’
“In my view, it is neither fair nor reasonable to continue to increase the differential between the tracker interest rate and the variable interest rate. The government indicated some time ago that tracker mortgages could be moved to IBRC as part of a deal with the troika over improving the terms of the promissory note for the former Anglo Irish Bank. However, we have heard precious little on this aspect of the negotiations in recent months. Such a move would improve the overall funding position of the banks and could relieve some of the pressure from variable rate customers.
“I would call on the Minister for Finance to state what the government’s strategy is for variable rate mortgage customers. Is the government willing to stand back and allow variable rate customers continue to be the fall guy for losses incurred elsewhere in the banks?