WITH IRISH BANKS finally beginning to return to profit, how much longer can the majority of them reasonably hold out before lowering their variable mortgage rates?
That’s the question that’s on the minds of many Irish mortgage-holders at present, not least because roughly 110,000 of them are in arrears.
Aside from AIB, which has admittedly now cut its mortgage rates twice in six months, our other banks have been noticeably sluggish when it comes to dropping their rates.
Just last week the chief executives of both Ulster Bank and Bank of Ireland appeared before government committees and refused to be drawn on potential rate cuts.
Meanwhile, the banks continue to charge up to 2% more for their mortgage products compared to elsewhere in the Eurozone, while mortgages in Northern Ireland are paid for on rates of between 1% and 1.5% less than that seen in the south.
“Irish banks continue to gouge mortgage holders. If they continue to play hardball with variable customers then the time has come for the government to play hardball back,” Fine Gael MEP Brian Hayes said in a public speech this evening.
Unless the banks indicate a willingness to reduce variable mortgage rates, the government should introduce a special bank levy which could be used to provide additional relief through the tax system for variable rate mortgage holders
The Irish banks have very short memories. It was the taxpayers who saved them.
Six billion euro of capital invested in Irish banks was to provide for losses on their mortgage book. On this issue the banks are showing no concern for their customers.
Hayes similarly called on the government to introduce “much needed competition” to the mortgage market.
This should be done by encouraging foreign banks to invest in our residential mortgagee market, and by supporting the Credit Unions in providing limited mortgage products, according toHayes.
One of the reasons cited by David Duffy, outgoing AIB CEO, for high mortgage rates in Ireland is that our banks have no access to cheap ECB money at present, which makes the idea of foreign banks lending here a very attractive one.
Hayes also called on competitiveness to be stimulated in our residential economy by tasking the Housing Finance Agency (HFA) with providing 25 year fixed term mortgages, to first time buyers in particular.
With interest rates at historically low levels there is an opportunity for a state backed institution such as the HFA to borrow long term at exceptionally favourable terms.
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