If you would like to submit a contribution to our Readers Blog section then follow this link. Be sure to include your full name, address and contact number otherwise your submission will not be considered for publication. We will contact you prior to publication.
The government owns AIB. Therefore, AIB must be told to reduce variable mortgage rates by two percent and not just by the quarter of a percent they announced. Other banks are sure to follow, or else AIB will gain market share.
A two percent interest-rate cut, applied to an average mortgage of €250,000, at 300,000 customers, means a saving of €1.5bn. A conservative economic multiplier effect of five would mean an extra €7.5bn to be spent in the economy, creating jobs and sustaining current ones.
Furthermore, a rate reduction for personal borrowers, from 10% to 4%, would boost sales of new cars, household goods, etc.
The cost of funds for a bank is the rate they offer deposit holders and the rate at which they borrow. Bank of Ireland’s on-demand deposit rate is 0.01%. They can borrow at close to 0%, while charging business 0.6% to lodge.
© Irish Examiner Ltd. All rights reserved