herald

Wednesday 7 December 2016

Michael Noonan fails to ask banks for variable rate cuts

Finance Minister Michael Noonan
Finance Minister Michael Noonan

FINANCE Minister Michael Noonan has failed to ask banks to cut their high variable mortgage rates, despite a high-profile series of meetings with executives from domestic lenders.

Mr Noonan met senior officials from AIB and ACC yesterday and was due to meet others from Bank of Ireland, Permanent TSB and KBC Bank today.

Ulster Bank officials are due to see the minister next week.

But the banks are not being asked directly to cut their variable mortgage rates, a spokesman for the minister confirmed.

Only AIB, and its subsidiary EBS, have responded to previous calls from Mr Noonan for lower variable rates.

Others, such as Bank of Ireland, have reduced their fixed rates but left variable rates unchanged.

Selected variable-rate customers of Permanent TSB, KBC and Ulster Bank can benefit from lower interest rates if they have built up equity in their homes.

It is understood that a fear of having renewed calls for lower variable rates rejected by the banks, and the concerns about political interference in banking, have stopped the minister demanding more variable rate reductions.

Bankers are being asked to outline what options homeowners have been offered to reduce their monthly repayments. These options include fixed rates that are lower than variable rates.

The banks are also being asked by Mr Noonan to outline exactly how many of their variable rate customers availed of these options.

Threat

"Discussions also took place on the level of lending to SMEs and farmers," the minister's spokesman said.

Variable rates average around 4.2pc, compared with tracker rates of 1pc.

Brendan Burgess of the Fair Mortgage Rates Campaign called on the minister to carry through with his threat to change the law to stop banks overcharging for variable-rate mortgages.

He said competition would not force lenders to reduce variable rates for existing mortgage holders.

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