Banks warned to cut rates or face government cap

Banks have been told they must cut variable mortgage interest rates or face government policy decision that may include a cap on rates.

Central Bank chief Patrick Honohan has warned banks to cut their variable mortgage interest rates or face government policy decision that may include a cap on rates.

In a report for Finance Minister Michael Noonan, Patrick Honohan said banks needed to recognise that charging "exploitative" rates would be counterproductive if it forces government policy reactions.