Thursday 29 September 2016

Comforting words are no good without action

Published 02/04/2015 | 02:30

MAYBE it is because there is a general election around the corner.

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Or maybe it has just become untenable to have banks back making profits again when large numbers of their customers are being discriminated against over the mortgage rates they are being charged.

But something changed, and changed utterly, yesterday.

For years the Government has stood idly by and allowed banks to operate a system of mortgage apartheid.

The lenders have been getting away with charging large swathes of their customers vastly different mortgage rates to other home buyers.

Those on trackers and new mortgage customers pay less than the 300,000-plus existing mortgage holders who are on variable rates.

The differences in payments are considerable, amounting to €4,000 a year for a family with a variable mortgage compared with a family with a similarly sized mortgage on a tracker rate.

And mortgage rates in this country are almost 2pc more than they are elsewhere in the eurozone, even though European Central Bank rates are close to zero for the 19 members of the currency bloc.

The argument to justify this unfairness is based on the fact that banks are losing money on trackers, and almost one in seven mortgage holders are in some form of arrears.

But thanks to the pressure put on by Fianna Fáil finance spokesman Michael McGrath - and extensive coverage of the issue in this newspaper - Taoiseach Enda Kenny and Finance Minister Michael Noonan have woken up to the issue.

After saying the Government cannot intervene in the commercial decisions of the banks and ignoring the problem, Mr Kenny and Mr Noonan are now calling for rate cuts.

Calls like that are likely to fall on deaf ears.

But just what they plan to do, other than asking the banks to act, is not clear.

Late last night Mr Noonan said he would meet Central Bank Governor Patrick Honohan to talk about high variable rates.

However, all this amounts to little more than comforting words.

Words are of little use.

What the 300,000 families suffering the pain of punitive variable rate need is action, Mr Kenny.

Irish Independent

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