Calls for Govt to force banks to reduce rates

There are fresh calls for the Government to force banks to pass on ECB interest rate cuts to its mortgage customers.

Yesterday, the European Central Bank cut its key rates by 0.25%, which is automatically passed on to tracker mortgage holders.

However, those on variable rate mortgages rely on banks to pass the rate cut onto them.

So far, Ulster Bank is the only lender to confirm it will do so, while AIB has announced that it will not.

Frank Conway of the Irish Financial Review has said more people will fall into arrears if rate cuts are not passed on, and therefore it is vital for the economy that the banks comply.

Mr Conway said: "The argument ultimately is they want to put it in their back pocket. If you read the language from AIB yesterday, the language very clearly was that they need the bank to get back onto a stable footing.

"That's really 'I need the money in my back pocket, not in the pocket of my customers'. So, I don't buy into all of it. I think there is a logic though, you certainly need a functioning banking system, but monetary policy is there so that it purely feeds into the economy."