Mortgage interest rates: Central Bank action pointless

IRISH banks — including one bailed out by taxpayers — are back making huge profits while home-owners on variable mortgage rates pay 2% more than those in other eurozone countries.

That is neither just, reasonable, nor sensible yet the Central Bank, which has imposed very tough restrictions on individual borrowers, has adopted a wimpish approach in dealing with Irish banks.

Under a new CB rule which does not come into force until next year, banks will — wait for it — have to tell variable rate customers that they could save money by switching.

That is a pointless exercise, to say the least, and an insult to the 300,000 variable rate home-owners who continue to be overcharged on their mortgages.

The Irish Brokers Association has estimated that an Irish family will need to earn an extra €12,500 a year just to cover the difference between a variable and a tracker mortgage rate. That puts the shameful and shambolic change in the CB’s Consumer Protection Code into perspective.

Fianna Fáil has tabled a Bill to give the Central Bank the power to tackle excessive mortgage rates. What any new law must also do is instruct the CB to use that power and force the banks to bring down rates and stop ripping off the people who bailed them out. Expecting banks to do the decent thing is not an option.