AIB/EBS rate cut a welcome start that needs to be built on – McGrath

Fianna Fáil Spokesperson on Finance Michael McGrath has described the reduction in variable interest rates announced today by AIB/EBS as a welcome start that needs to be built on to secure substantial variable rate reductions across the Irish banking system.

Deputy McGrath stated, “I very much welcome today’s announcement which will benefit both owner-occupier and buy-to-let mortgage holders on a variable rate with AIB, EBS and Haven. Over the past month, since Fianna Fáil put it firmly on the political agenda, a head of steam has built up on the issue of excessive standard variable rates being charged to 300,000 variable rate mortgage customers throughout the country. AIB now needs to back up today’s announcement by aggressively seeking to win over mortgage customers from other banks. This is the kind of competition dynamic that we need to see develop in the market.

“The standard variable mortgage rates being charged by banks in Ireland are completely unjustifiable. With the falling cost of funds and rapidly rising net interest margins, the banks are extracting more and more profits from variable rate customers. The attitude of Bank of Ireland and Ulster Bank this week is reprehensible in light of the compelling evidence that customers on variable rates are being simply ripped off. Both Minister Michael Noonan and the Central Bank need to deliver a strong message to the banks that the rates being charged are not unacceptable in light of the improved funding environment in which they operate.

“The fact that the average interest rate on mortgages in the euro area is 2.09% compared to rates of up to 4.5% in Ireland underlines the extent of the problem. The campaign for fairness for standard variable rate customers in Ireland is now gaining considerable momentum and will hopefully result in savings over the coming months for those trapped paying excessive rates. Today’s announcement is a step in the right direction but there is a long way to travel before we have rates that could be described as anywhere near reasonable.”