Empty threats over interest rates, claims Fianna Fáil

The Government was accused of making empty threats to banks over their failure to pass on rate cuts as new figures showed a rise in mortgage arrears of up to three months.

The number of residential mortgage accounts falling behind with payments by up to 90 days increased between February and March from 25,579 to 26,242, according to the Finance Department.

In brighter news, the number of mortgages in arrears of more than 90 days dropped 1,133 to stand at 58,005 in the same period.

However, mortgages which have debts of more than 720 days now account for a third of all arrears with the figures going up from 28,936 to 29,061.

Split mortgages, where part of the loan is parked for payment at a later date, increased by 628 to stand at 22,344 by the end of March.

The new figures came as Tánaiste Joan Burton came under fire in the Dáil for failing to act against banks who have refused to pass on rate cuts to customers on variable rate mortgages.

Fianna Fáil’s Timmy Dooley told the Dáil 300,000 variable mortgage rate holders in Ireland are still paying 2% higher on average than the rest of the eurozone.

Mr Dooley accused the outgoing governor of the Central Bank, Patrick Honohan, of giving a “weak response” to the situation by asking lenders to change course in order to “head-off” a political response.

He said the Government was taking a “softly, softly” approach to the banks, rather than fighting for the interest of hard pressed customers.

Mr Dooley insisted that the Government should act on its threats to impose a levy on banks that do not pass on interest rate cuts to their customers.

He accused the banks of “gouging” customers, and said that the Government’s position would not “send shivers” down the spines of the lenders.

Mr Dooley said that hundreds of thousands of families were being deprived of money by the banks, and if they received that extra cash it would boost the recovery.

Ms Burton said the Government was still considering its position on the issue, but that the Cabinet would discuss the matter in the next few weeks, and the Coalition would outline what action it is going to take in “the near future.”

“The variable rate mortgage rates are excessive in terms of cost,” Ms Burton told the Dáil. “Given that the Irish taxpayer bailed them out for an extraordinary amount… the banks would be wise to listen to the advise in relation to their pricing policies and provide better deals for customers.”

The variable mortgage rate situation has proved embarrassing for the Government as Finance Minister Michael Noonan has met with Mr Honohan to discuss the situation.

However, the Central Bank has resisted attempts to get it to set interest rates, saying that it is not its role to dictate terms to lenders.

This has led opposition parties to accuse the bank of abandoning its role as a watchdog for customers.

Fianna Fáil has branded Government suggestions that it may move to impose taxes on the banks unless they move on the issue as an “empty threat” which leaves customers at the mercy of lenders.

DISCOVER MORE CONTENT LIKE THIS

More on this topic

Short-term mortgage offers attract but may cost more in long runShort-term mortgage offers attract but may cost more in long run

Mortgage approvals increase slightlyMortgage approvals increase slightly

Set aside 30% of housing developments for first-time buyers, FF saySet aside 30% of housing developments for first-time buyers, FF say

Mortgage rule ‘tweaks’ anticipatedMortgage rule ‘tweaks’ anticipated


Lifestyle

It turns out 40 is no longer the new 30 – a new study says 47 is the age of peak unhappiness. The mid-life crisis is all too real, writes Antoinette Tyrrell.A midlife revolution: A new study says 47 is the age of peak unhappiness

Dr Irwin Gill, consultant paediatrician with special interest in neurodisability, Children’s Health Ireland (CHI) at Temple StreetWorking Life: Dr Irwin Gill, consultant paediatrician at Temple Street

THE temperature of your baking ingredients can affect the outcome.Michelle Darmody bakes espresso and pecan cake and chocolate lime mousse

More From The Irish Examiner