Minister duped as customers forced to lock in to fixed rate for 2 years to make saving
Bank of Ireland’s decision yesterday to reduce its fixed mortgage rate but to keep its standard variable rate at staggering 4.5% is an effective snub to the Minister for Finance and is not in any way acceptable to those of us who have been consistently campaigning for an actual reduction in the standard variable rate, according to Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath stated, “The essential purpose of the meetings between the Minister Noonan and the banks in recent weeks was to reduce the exorbitant standard variable rates being charged by the banks to 300,000 mortgage customers. Carefully placed media leaks indicated that variable rate cuts of 0.75% were on the way over a period of time. It now looks like the Minister has been duped by the banks. If yesterday’s announcement is their complete response to the meeting they held with the Minister, Bank of Ireland is refusing to cut their ridiculous variable rate and is instead effectively trying to force existing customers to lock in to a two year fixed rate. Reducing the fixed rate is not a substitute for reducing the standard variable rate itself.
“Fixed rate mortgages are an entirely different product to a standard variable rate mortgage. If a customer locks in to a fixed rate, and an existing Bank of Ireland customer can only avail of a fixed rate for a minimum of two years, they will lose out again if the variable rate falls below the fixed rate. In addition, if a new competitor enters the market offering a much lower variable rate, the customer will face substantial penalties if they seek to as switch their mortgage.
“Minister Noonan said the purpose of his meetings was specifically to raise the issue of standard variable mortgage rates which he believes are too high. Bank of Ireland now appears to have snubbed the Minister and is sticking with an indefensible and unjustifiable variable rate of 4.5%. If their response is indicative of the response yet to come from the other banks, standard variable rate customers have once again been very badly let down by this government.”