Jeremy Masding, the chief executive of Permanent TSB, was the latest bank boss to say that he would not bend to intense pressure from opposition politicians who claim that customers are paying for the mistakes of the banks in having to pay high standard variable rates.
Mr Masding yesterday mounted a robust defence of PTSB saying that its mortgage rates fairly reflected the costs of doing banking in Ireland following the country’s financial crisis.
AIB cut its variable rates earlier this month, but chief executive Richie Boucher of Bank of Ireland and the Ulster Bank boss Jim Brown told the committee in recent weeks that they were not for turning and will not immediately reduce their mortgage rates.
KBC Bank, which is seeking an increased share of the mortgage market, also said this week that the costs of operating a bank in Ireland are currently higher than other countries.
Headline home loan rates reportedly available on the continent have hidden arrangement fees, the bankers say.
However, debt advisers say that the difference between what individual banks are charging for their standard mortgage rates and the fact that variable rate customers are subsidising those on tracker rates mean that the furore will not go away.
“The AIB standard variable of 4.15% on a home loan mortgage of €250,000 over 30 years would cost €1,215 a month. The same mortgage with Bank of Ireland’s 4.5% would cost €1,268 a month,” said Michael Dowling, a leading debt adviser.
“I do not see the banks cutting rates unless there is some sort of Government levy. There are 400,000 loss-making tracker accounts and the banks are relying on their other [variable] 300,000 customer accounts to make money. One group is subsiding the other,” Mr Dowling said.
Eugene McErlean who advises customers on debt, said there is no solution in sight.
“There are a number of things that could be done. The regulator has the power to intervene in cases where banks are abusing their power. But all the indications are the Central Bank will not intervene,” he said.