Bank of Ireland will be pressed today to follow the lead of AIB and KBC bank and offer distressed borrowers long-term solutions to their debts.
The first of a number of banks to appear before the Joint Oireachtas Finance Committee, Band of Ireland will also be asked to reduce variable mortgage rates in line with what AIB has done in recent days and KBC earlier this year.
A scheme to help distressed mortgage holders in their dealings with the AIB group has resulted in more than 1,300 long-term resolutions being reached in the past year.
It was facilitated by the Irish Mortgage Holders Organisation which entered into an arrangement to act as a third-party broker between AIB and borrowers. It also encouraged KBC to offer similar terms.
In its first full year of operation, the AIB arrangement offered 1,330 long-term resolutions for people in mortgage arrears. AIB has now decided to extend the scheme for another 12 months.
“We are going to meet the other banks over the next few days and we are also talking to KBC about extending their pilot programme,” said David Hall, founder of the Irish Mortgage Holders Organisation.
“I am more convinced than ever that the use of third-party intermediaries with the banks is the best way to resolve mortgage debts. The concept has worked exceptionally well.”
Mr Hall said his organisation would also welcome collaboration with the State’s Money Advice and Budgetary Service.
At Oireachtas Committee hearings due over the next two weeks, TDs and Senators are expected to put pressure on AIB’s banking rivals to introduce a similar scheme.
Richie Boucher, group chief executive of Bank of Ireland, will be quizzed by members later today. This will be followed by meetings with senior executives from Permanent TSB, Ulster Bank, and AIB next week.
Fianna Fáil spokesman on finance, Michael McGrath, wants other banks to follow AIB’s lead.
“I am glad to see that over 1,300 mortgage holders have secured a long-term restructuring deal on their mortgage through the IMHO/AIB arrangement,” said Mr McGrath.
“However, these figures also highlight the real weakness we have at the moment in the approach being taken with mortgage arrears — and that is the lack of consistency and transparency in the way cases are being treated. We know that AIB is writing off mortgage debt in certain cases, but in contrast Bank of Ireland is refusing categorically to do this under any circumstances.”
Mr McGrath also wants other banks to follow AIB’s example in cutting variable mortgage interest rates.
“At a time when their cost of funds is so low, there is simply no justification for the variable mortgage rates being charged by banks in Ireland,” he said.
“What this actually means is that an Irish mortgage holder with a mortgage of €200,000 is paying almost €4,000 more interest a year than their eurozone counterpart. This is unjustifiable and unacceptable.”
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