Noonan has not asked banks to cut variables
Finance Minister Michael Noonan has failed to ask banks to cut their high variable rates, despite a high-profile series of meetings with executives from the six domestic lenders this week and next.
Mr Noonan met executives from AIB and ACC yesterday and is due to meet others from Bank of Ireland, Permanent TSB and KBC Bank today. Ulster Bank officials are due to meet the minister next week.
But the banks are not being asked directly to cut their variable rates, a spokesman for the minister confirmed to the Irish Independent.
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.
And 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.
"Discussions also took place on the level of lending to SMEs and farmers," the minister's spokesman said.
Variable-rate mortgages are so much more expensive than trackers that it takes a family almost three months to earn enough to meet the extra cost.
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.
Legislation making it a crime to charge more than 3pc for a variable rate mortgage was the only answer, he said. The law should also be changed to stop banks offering lower variable rates to new customers only, he added.
"There are 150,000 mortgage-holders who are prisoners of their lenders. They can't move because they are in negative equity, have a loan-to-value of 80pc or more, had to re-schedule their home loan, are in arrears or don't have sufficient income," said Mr Burgess.