Tanaiste slams BoI for refusing mortgage cuts
Tanaiste Joan Burton has lashed out at Bank of Ireland's decision not to cut variable interest rates despite the threat of a penalty from the Government.
Minister Michael Noonan outlined on Friday that the State's six main banks would face the prospect of a fine and possible intervention from the Central Bank if they fail to reduce their mortgage rates.
Bank of Ireland's chief Richie Boucher met with Finance Minister Michael Noonan last Thursday to discuss the prospect of slashing interest rates.
But a spokesman for the bank made it clear that it would not bow to pressure.
The spokesman said the talks had focused on the bank's efforts to encourage customers to avail of fixed rates as opposed to any cut in variable rates.
"The meeting was a constructive and professional one," the representative said.
"The bank outlined its strategy and focus on fixed-rate offerings which mitigate interest rate risk for customers and the bank, the availability of the bank's fixed-rate offers to all Irish SVR customers, and the savings to the bank's Irish SVR customers from the bank's fixed-rate offers."
Bank of Ireland is confident that its focus on fixed rates as opposed to variable rates will be sufficient to satisfy Mr Noonan's demands.
But when asked about Bank of Ireland's decision, the Tanaiste said that the banks won't be allowed get off lightly.
"The banks seem to have a short-term memory loss in respect of all that taxpayers in Ireland did," Ms Burton said.
"If they are charging excessive rates and they fail to respond to that, then there are other mechanisms down the road that can be used to address that series of issues."
Ms Burton added that the discussions are ongoing with the different banks.
Mr Boucher previously outlined that the Bank of Ireland's intention was to encourage its customers to avail of fixed-rate mortgages to avoid the risk posed by future interest rate increases.
Campaigner for lower variable rates for mortgage-holders Brendan Burgess said legislation should still be brought in to deal with the issue and force the banks to comply.
He said he was fearful that the impetus for such legislation would be lost if the banks cut their interest rates in response to the finance minister's request.
"I think it would be better if the Central Bank met the banks rather than the finance minister, and it would be better if Patrick Honohan had the power to direct them to change interest rates. The conversations would be more meaningful," he said.