Central Bank under fire over variable rate mortgages

The findings of a Central Bank probe into why banks failed to pass on variable mortgage rate cuts to customers needs to be made public as soon as possible, opposition TDs have urged.

Michael McGrath, Fianna Fáil’s finance spokesman, has written to Central Bank governor Patrick Honohan calling for research into how such mortgages became markedly higher here than in the rest of the eurozone, to be released in order to trigger action on the issue.

Mr McGrath insists Irish customers are being “ripped-off” in order to boost bank profits while watchdogs do little to aid mortgagees.

Finance Spokesperson @DeputyMcGrathTD will be speaking to @ciaramcdonagh on @NewstalkFM after 1pm about rip-off variable rate mortgages

— Fianna Fáil (@fiannafailparty) April 7, 2015

“With each passing month, thousands of families on variable rate mortgages in Ireland are paying hundreds of euro more in mortgage interest than families elsewhere in Europe,” he said.

“This is because variable rate customers in Ireland are typically charged between 4% and 4.5% on their mortgage, whereas the rate in the euro area as a whole is 2.3%.

“The blatant discrimination by the banks against variable rate customers in Ireland is unjustifiable and needs to stop. It is a drain on the disposable income of 300,000 mortgage holders and is having a significant impact on the domestic economy.

“For every 1% of additional interest heaped on variable rate mortgage customers, there is an additional €400m taken out of family budgets across the country.”

Opposition parties have stepped-up pressure on Finance Minister Michael Noonan to intervene in the situation.

After a meeting between Mr Noonan and governor Patrick Honohan, the department said the Central Bank would continue its research and publish its findings shortly.

Regulators have been concerned about dictating commercial terms to lenders.

However, Mr McGrath said that the Government had allowed the situation to drift for too long.

“I have written to the Governor of the Central Bank about the importance of action being taken on this issue,” he said. “The Central Bank has had long enough to research the issue of high variable rates in Ireland. We need the research phase to come to an end and the Central Bank to start flexing its muscle as the consumer watchdog on behalf of variable rate mortgage customers in Ireland. Fianna Fáil will continue to vigorously pursue this issue until action is taken on the blatant rip-off of these customers.”

ON AIR NOW: Michael McGrath, @fiannafailparty Finance spokesperson calls on Central Bank to publish SVR report without delay. #ntfm

— Lunchtime Live (@LunchtimeLiveNT) April 7, 2015

Mr Noonan insists he is concerned about the failure to pass on rate reductions to customers and intends to try and put pressure on the banks to shame them into a different stance.

Opposition parties have warned this is not good enough and Mr Noonan should use his influence with the Central Bank to get it to act as a consumer watchdog towards the lenders, rather than a regulator.

The Government is to unveil new measures to deal with house repossession cases at the end of the month.

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