Variable mortgage customers miss out

Michael McGrath: Wants variable rate cut.

The country’s largest banks have confirmed they will not cut variable interest rates in direct response to the ECB interest rate reduction, which will see tracker mortgage holders saving €15 per €100,000 of their mortgage.

AIB said that, while its customers on tracker mortgages will benefit from the interest rate cut, “the tracker mortgage product is linked to the ECB interest rate whereas all other mortgage products are not — they are decoupled from ECB interest rates”.

It said it keeps all its rates under review.

The bank also insisted that there was no strategy at the bank whereby the cost of the reduction in tracker rate mortgage interest rates would have to be borne by its variable rate customers.

While the ECB rate has been coming down significantly in recent years, AIB increased its variable rate by 0.4% last June.

Bank of Ireland said its tracker rate customers would see a cut from Nov 13.

“Variable rate products are not ECB tracked so do not move automatically — however, all rates remain under regular review,” it said. “The bank generates funds from a variety of sources and our pricing will continue to reflect the cost of funding.”

Fianna Fáil finance spokesman Michael McGrath said that as variable rate mortgage holders had not had the benefit of the cuts experienced by those with the tracker version, the gap between the two rates was growing all the time and any link between them had been “well and truly severed”.

“Two borrowers, one on a tracker rate and one on a variable rate, are now paying vastly different amounts in their monthly mortgage repayments,” said Mr McGrath. “I would call on the banks to pass on the ECB rate to variable rate customers as well. One of the reasons the ECB took the decision was in an effort to boost the European economy.”

Mr McGrath said many variable rate customers were falling further and further into arrears.

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