Noonan says 'shop around' for mortgage rate deals
Published 05/10/2015 | 02:30
Finance Minister Michael Noonan says homeowners on variable-rate mortgages need to "shop around" to get the best deals on offer.
The minister is ruling out direct intervention to force banks to cut their rates on the basis that it would damage the choice available to homeowners.
Last week, Belgian-owned bank KBC announced it would cut its variable mortgage rate for new and existing customers.
In an interview with the Irish Independent, Mr Noonan insisted that there was better value to be obtained.
"People should shop around. I don't understand the reluctance of people to change lenders or to go for fixed rate for a year or two because there are real gains to be made now and yet there's a reluctance to change."
Mr Noonan said there were dangers attached to him directly forcing banks to cut their variable interest rates.
"If you force them, what will happen is - the risk you'll be taking - is that mortgages for new borrowers would dry up and no new mortgagees, no new financial institutions offering mortgages, would come into the market."
The minister said his efforts to date had delivered results.
"We've done a lot of work on that. We've got them down. AIB are down. They have three movements downwards. You can get money now from AIB at 3.65pc.
"Every bank that I spoke to has made a positive offer to their lenders, which reduces the cost of their mortgage.
"The Central Bank wouldn't agree ever that the margin was as big as is being recited by the Opposition. They are of the view that the excessive margin was somewhere around 1pc - maybe a little less. But there's movement now."
KBC's reduction is the first since six banks had meetings with Mr Noonan about high mortgage charges.
AIB and its subsidiary EBS responded to previous calls for lower variable rates.
Others, such as Bank of Ireland, have reduced their fixed rates but left variable rates unchanged. Some customers of Permanent TSB, and Ulster Bank can also benefit from lower interest rates.