Central Bank 'doesn't care that lenders are ripping off customers'
The Central Bank has been accused of not caring if banks are fair to mortgage customers - because of its failure to do anything about sky-high variable rates.
Consumer advocate Brendan Burgess said the Central Bank must do more to tackle the issue.
Mr Burgess, who founded the Fair Mortgage Rates Campaign, said the average variable rate has fallen in the past two years following pressure on lenders.
But there is still a huge gap between the average rate charged to new home-buyers here and those in the rest of the Eurozone. New buyers are charged 3.56pc, while the average in the Eurozone is 1.81pc, according to Central Bank figures.
"So the gap has remained pretty much the same. Today Irish borrowers are still paying 1.75pc more than the average rate paid by borrowers in other Eurozone countries," he said.
Mr Burgess singled out KBC and Bank of Ireland, who he said charge existing customers much higher rates than they charge new customers.
"And it seems that the Central Bank is not prepared to do anything about this."
He also said Finance Minister Michael Noonan had a conflict of interest as he wants to maximise bank profits to maximise the value of State-owned banks.
Mr Burgess said the recent falls in banks' share prices after the Brexit vote will make the minister less enthusiastic about doing anything that threatens the banks' profits.
"The Central Bank is also hugely conflicted. Its primary concern is the capital position of the banks. As long as the banks are profitable, the Central Bank doesn't care whether or not it's fair," he added.
The Central Bank, he said, does not want the power to control mortgage rates - despite legislation going through the Oireachtas to give it these powers. Mr Burgess also said the Central Bank recently changed the Consumer Protection Code so that lenders are now obliged to tell borrowers how they calculate their mortgage rate.
"What absolute nonsense. All this does is impose additional regulatory costs on the banks - costs which will be passed on [to] borrowers," he said.
The Central Bank had no comment on whether or not it cares if banks are being fair to mortgage holders. But it is not in favour of mortgage rate caps. The Central Bank spokeswoman quoted Governor Philip Lane, saying: "We don't think having legislative caps is the best way to ensure competition. We will work not just to the spirit but to the letter of every law that comes in."