Bank of Ireland is deliberately keeping variable mortgage rates high in a bid to force costumers to chose fixed rates an Oireachtas Committee has heard.
The bank’s chief executive Richie Boucher admitted the lender is “deliberately incentivising customers to move to fixed rates”.
Appearing before the Finance Committee Mr Boucher was accused of “treating people badly” by committee chairman John McGuinness.
“The amount of hardship that your bank and others have put on individual borrowers chasing your money is significant. And it would be remiss of me, at this meeting, if I were not to say to you that I believe you treat people badly.
“There are families out there in deep distress. Some of them have lost members through suicide because of the impact that this whole banking crisis has had on them,” Mr McGuinness said.
However, Mr Boucher defended the banking sector and said he had “personal experience” of members of his own family losing businesses. “So, it’s not as if I don’t understand, and this characterisation that we don’t understand, I don’t agree with,” he said. “Both as a business and as a human being and as an individual, I have seen what happens.”
Around three quarters of Bank of Ireland’s new mortgages are now on fixed rates Mr Boucher said. He said this was as a result of a deliberate strategy by the bank.
“The borrower gets certainty on what they repay and we get certainty from our point of view. It does bind you for a period, but it’s not for the lifetime of the mortgage.” Fianna Fáil’s finance spokesman Michael McGrath questioned Mr Boucher on mortgage pricing and asked how he could justify charging a variable rate of up to 4.5% when the bank is accessing funds at less than 0.75%.
“You are charging some customers still more than six times the cost of funds than the bank is accessing, how can that be justified?” he asked. Mr Boucher said the bank has a “very clear strategy” on pricing and as a commercial business it has to consider how it uses its shareholders money.
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