It’s amazing, sort of, how the banks can immediately raise interest rates but it takes AIB two months to reduce a rate by a quarter point.
Home loan rates are lower in many other parts of Europe and have been for some time, as the banks here either did not pass on any reduction when the key rates were cut by the ECB or only delivered token rate reductions.
Note that the current Euribor rate is at a rock-bottom level.
The Euro Interbank Offered Rate is a daily reference rate, based on the averaged interest rates at which eurozone banks offer to lend unsecured funds to other banks in the euro wholesale money market, or the interbank market. The banks impose a huge retail margin.
So, any reduction is slight compared with the hefty interest rates charged for all types of loans. The interest rate we get from savings is of course paltry.
A lot of things have incensed the Irish people over the last eight or nine years.
To very many folk across Ireland, the banks represent everything that is wrong with today’s world.
We are all very conscious that the banks were the main drivers of our economic woes.
Sure, they were helped by greed, charlatans, weak government and even weaker regulators, but the bottom line is the banks loaned money like it was confetti at a wedding without looking for much by way of your ability to pay should it all go wrong.
And why wouldn’t they? They didn’t have to worry about non-recourse home loans that apply in many other countries.
Also, while the going was good, it increased the banks’ profits and the lads got hundreds of thousands, if not millions, in bonuses.
When it all went pear-shaped those bonuses weren’t paid back.
Were ridiculous salaries and bonuses stopped?
I reckon that ridiculous salaries were held in check for a short while, but came back on a fast-growth track several years ago.
But what makes us even angrier is their treatment of those who have mortgages.
Not only did borrowers not benefit from lower mortgage rates but their arrears have been aggressively pursued.
Their prevailing argument is that cutting folks’ mortgage debt, or helping them out, would be tantamount to supporting the profligacy of the borrower.
We know that the banks need to get back on track if we are ever to have a sustainable, effective economy.
Maintaining interest rates that little bit higher helps.
The problem is the banks do not believe that they have to share in our pain.
Indeed, lenders see no reason why we should share in their gain. Their argument for the high pay levels is that they need the very best talent available and that these guys and gals will go elsewhere if they are not paid the top rate.
Well, if the returns most of us are getting from our few bob in investments are anything to go by, the people we have in the banks are far from the best.
Now since the banks — the architects of our problems — are not willing to take some of the pain, politicians are seizing the opportunity to redress the situation. There is a hope, albeit a slim hope, that given the arithmetic in the Dáil, there are some who have the bottle to deal with the banks.
We should not be surprised if the banks resist these attempts.
It should not be tolerated.