Saturday 3 December 2016

Major lenders urged to follow AIB in cutting 'rip-off' mortgage rates

Published 07/08/2015 | 13:20

Fianna Fail's finance spokesperson Michael McGrath
Fianna Fail's finance spokesperson Michael McGrath

Major lenders have been urged to follow Allied Irish Bank (AIB) in cutting "rip-off" mortgage rates.

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In its third drop over the last year, AIB has reduced interest on its standard variable rate home loans by 0.25%.

The latest move will save a family with a 200,000 euro mortgage around 325 euro a year.

The State-owned bank said the three reductions in total should knock nearly 1,000 euro off repayments on the same-sized mortgage.

Some 156,000 customers, including EBS and Haven borrowers, will benefit from the cut, which comes into effect on October 1.

Finance Minister Michael Noonan welcomed the reduction for new and existing customers.

"This is the third such rate cut that the bank has implemented and will be of significant benefit to large numbers of the bank's customers," he said.

But Fianna Fail's finance spokesman Michael McGrath said other lenders should be forced to follow AIB's lead.

Singling out Bank of Ireland in particular, he said that lender must reduce its "ridiculous" interest rates.

"Bank of Ireland has stuck rigidly with an indefensible and unjustifiable variable rate of 4.5%," he said.

Mr McGrath said existing variable rate customers at the country's largest bank have not seen any benefit in terms of reduced monthly payments despite "the overwhelming evidence that they are being ripped off".

"The Minister for Finance's efforts to date have failed and he has been effectively snubbed by Bank of Ireland despite the State's 14% shareholding in the bank," he added.

The AIB interest rate cut was announced as the lender revealed pre-tax profits of 1.2 billion euro for the first half of this year.

Earlier this year, Taoiseach Enda Kenny said it was not acceptable that bailed-out banks refuse to cut mortgage repayments for hundreds of thousands of homeowners.

There are around 300,000 homeowners in Ireland on standard variable rate mortgages.

They are being forced to pay around double the interest of similar home loans across Europe.

The higher rate heaps several thousand euro more onto annual repayments compared to the EU average.

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