Michael Noonan to meet bank chiefs over cut in rates

The finance minister has revealed plans to call in six of the country’s main mortgage lenders to discuss a reduction in interest rates.

Michael Noonan said the governor of the Central Bank was reviewing the cost of mortgages to banks.

“I’ve had consultations with the governor and he has done a piece of analysis to show the margin between the cost of money and what they’re getting for money when they lend it for mortgages, and he has that for me in the next 10 days or so.”

The minister is then expected to meet with the main lending institutions to discuss the report.

“I’ll present them with the evidence from the Central Bank and I’ll say look, we think you should reduce your interest rates, and we want to discuss it, and we want you to explain why you can’t but we’d prefer if you did. So if you call that pressure, that’s pressure but I’d see it as a discussion in the normal way, but I don’t have legal authority to direct.”

The minister’s comments came as Ulster Bank announced measures it hopes will entice 2,000 of its customers who are in arrears, but not engaging with the bank, to address the situation and avoid legal action.

The bank has created a customer communication, which it is issuing to those who are not engaging.

It makes eight promises including that if it agrees there is a reasonable chance of the mortgage holder meeting their obligation over time, it “may” offer a combination of reduced repayments, reduced interest rates and/or a longer time to repay the loan.

“If we agree revised repayment terms with you, and you keep to them, we will not seek to repossess your home,” it says.

“If your home is sold, we will work with you to agree a fair process to address your obligation to pay any residual debt. If your home is sold, and you qualify for social housing, we will not pursue you for the residual debt after the proceeds of the sale have been allocated to your outstanding home loan.”

However, it added that if the person does not engage and is more than 90 days in arrears, it is “likely” to commence procedures leading to legal action to repossess the home.

While Mr Noonan said it was a “very interesting and from my point of view welcome initiative”, Ross Maguire, founding member of New Beginning, said it was a proposal “designed to make Ulster Bank money and their customers homeless”.

“People should be very careful here and get independent advice before agreeing to such a bank-centric offer,” he said.

“New Beginning believes that there is nothing in this for borrowers other than homelessness and strongly cautions against the support of such a proposal. This is a proposal that might have had merit in 2009 but now lacks any understanding of where we are.

“The solution to the mortgage crisis is about keeping people in their homes as opposed to throwing them out on the streets. The Ulster Bank proposal involves 2,000 families being cast out of their homes and cannot be supported.”

DISCOVER MORE CONTENT LIKE THIS