Bankers dig in on variable interest rate cut
Coalition bluff called by lenders after levy threat BoI and Ulster Bank rule out variable reduction
Published 30/04/2015 | 02:30
Two of the country's biggest banks have called the Coalition's bluff on the threat of higher levies being imposed if they refused to cut variable mortgage rates for struggling homeowners.
The move piles pressure on the Government to follow through on its warning of higher taxes on the banks for not reducing rates.
The trenchant stance of the lenders takes the gloss off the Coalition's Spring Statement, where Finance Minister Michael Noonan signalled that pressure would be brought to bear on the banks over the coming months.
Bank of Ireland and Ulster Bank both firmly ruled out cuts to the interest rates on their standard variable-rate mortgages.
The move is an embarrassing setback for the Government following its threat to penalise those banks which refuse to budge on providing relief for 300,000 variable rate mortgage holders.
Just 10 days ago, the Coalition was talking tough as Health Minister Leo Varadkar strongly hinted at action if the banks do not move to ease interest for variable-rate borrowers, whose repayments are among the highest in the eurozone.
But Tánaiste Joan Burton went further and said the Government would also examine the option of increased taxes and levies if the banks refused to move on variable rates.
"That is a possibility," Ms Burton said when asked whether the Government would increase the levy if the banks did not cut rates.
AIB signalled it plans to cut rates. But Ulster Bank boss Jim Brown said its standard variable rate was "not overpriced".
And Bank of Ireland chief executive Richie Boucher said that while it keeps rates under review, it couldn't give any commitment.