Michael Noonan to push for variable rate cut
His comments came as Taoiseach Enda Kenny laid down a warning for lenders to pass on European Central Bank interest rate reductions to mortgage holders.
Mr Kenny said banks were back in money after being restructured.
“I would expect the banks here to treat the Irish people with a degree of understanding and pass on interest rate reductions to the consumer. They haven’t done that and in my view they should,” he told RTÉ’s Today with Sean O’Rourke radio show.
He singled out AIB as a lender he would like to see doing more for borrowers.
More than 300,000 homeowners are on variable rates of 4.5% . These rates are 1.8% higher than the average rate charged in the eurozone — a difference which sees borrowers pay an extra €3,300 per year.
Pushed by Fianna Fáil finance spokesman Michael McGrath yesterday, Minister Noonan said he would ask Central Bank governor Patrick Honohan what pressure can be applied on banks.
“I will ask him to consider what influence the Central Bank can bear to bring variable mortgage rates closer to the cost of funds,” he said.
Meanwhile, Mr Kenny revealed that new measures will be announced this month to change how insolvency and bankruptcy rules are applied. Government sources confirmed plans will go to the Economic Management Council this month on widening options for bankruptcy and easing access to insolvency services. These could have implications for mortgage-to-let cases.
But Mr Noonan signalled the Coalition was not agreed on making bankruptcy more accessible for families, specifically homeowners struggling with debt.
Labour wants bankruptcy terms reduced from three years to one, with the result that a reduced term would enable more people to write down debt without losing their homes.
But Mr Noonan seems set against easing the bankruptcy rules, as he explained in the Dáil.
“Bankruptcy is a big step for borrowers and one that may not deliver the desired result of retaining the family home.
“It is my understanding that of those who had a family home and were declared bankrupt in 2014, approximately 70% have lost or are expected to lose their homes,” he said.
Elsewhere, campaign group New Beginnings said it will launch a series of test court cases aimed at overturning variable rate increases in past years and returning overcharged funds to borrowers.
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