Banks’ recent tendency to unveil lower rates for new customers have ignored existing variable rate customers who are forking out up to €6,000 a year more than tracker mortgage holders on a standard €200,000 mortgage.
Calls from Fine Gael MEP for the Competition and Consumer Protection Commission (CCPC) Brian Hayes into what he termed the “excessive” rates were met with little success which, according to Irish Brokers Association chief executive Ciaran Phelan, is worrying.
“Recently, MEP Brian Hayes called for an investigation by the Competition and Consumer Protection Commission into the ‘excessive’ rates charged by banks for existing standard variable rate mortgage holders,” said Mr Phelan. “However, while the CCPC agreed there was ‘insufficient competition’ from lenders on the Irish mortgage market at the moment, they contend that an investigation would not be the best use of its resources and the issue should really be deferred to the Central Bank and/or the Department of Finance.
“This is a worrying position in light of the fact the Central Bank are also reluctant to step in to resolve the issue for Irish mortgage holders.”
The Central Bank said it has no role in regulating interest rates.
Mr Phelan’s comments come as a Fianna Fáil private member motion on the issue is to be debated in the Dáil today.
The motion is three- pronged and calls for action from banks, the Government, and the Central Bank in resolving what the party referred to as rip-off of tens of thousands of existing variable mortgage customers.
Calls on the Government include to engage directly with banks to press the seriousness of the issue.
Following a peer review of the Central Bank released earlier this month, which found that it needed to play a more active role in consumer protection, Mr McGrath also challenged the Central Bank to “step up to the plate” in this regard while the lenders themselves are being encouraged to consider the reputational damage they may be incurring from the rates being charged.
Fianna Fáil finance spokesman Michael McGrath added that the issue is the biggest factor affecting households’ finances but had not garnered similar levels of attention to date.
“There are at least 300,000 household mortgages who are on standard variable rate mortgages,” said Mr McGrath. “These families have benefited least from the current low interest rate rate environment in Europe. In fact, they have watched in absolute frustration as their mortgage rates have steadily risen as rates have fallen.
“In essence, they have been trapped in a situation which is costing them hundreds of euro a month. It is the number one issue affecting their household budget yet receives little or no attention from Government.”
Responding to criticism on the issue in the wake of launching lower rates for new customers in January, Bank of Ireland said its standard variable rates are constantly under review while Permanent TSB said it had moved to manage variable rate products and added that its standard variable rates are very competitive.