Government 'must move to cap home loan rates'
Our mortgage rates are €320 a month dearer than rest of Europe
Published 05/04/2015 | 02:30
The astonishing cost of variable rate mortgages is laid bare today with a new analysis revealing that Irish householders with an average €200,000 loan pay €350 more in interest each month than their European neighbours.
Mortgage expert Brendan Burgess found that while the average rate for new customers in Ireland is 4.2pc - the average in the rest of the Eurozone is 2.09pc.
The result is that an Irish customer on a variable rate with a €200,000 home loan pays an extra €4,200 a year more than those in Europe.
The new figures will heap pressure on Finance Minister Michael Noonan to do something about the sky high cost of mortgages.
He has already been urged to exert his authority over AIB, where the State is the major stakeholder, and force them to cut rates.
If AIB cut their rates then competition will ensure that the other main lenders will follow suit, Mr Noonan was told.
Stephen Hamilton of MortgageLine said on Friday: "The Government could pressure AIB to cut rates and if they do the others will follow."
Fianna Fail Finance spokesman Michael McGrath has said people with variable rate mortgages are being "discriminated against" by lenders
He accused the Government and the Central Bank of "doing nothing" to help those paying up to €1,000 a year more than those availing of offers available to new customers and €6,000 a year more than people on tracker rates.
"I think we have to recognise what is happening here. We have blatant discrimination being perpetrated by the banks against standard variable rate mortgage customers with the consent and blessing, it would appear, of both the Government and the Central Bank," Mr McGrath said.
"It simply is not acceptable that one group of customers are being targeted in this way to extract maximum profits from them.
Meanwhile AIB left thousands of families out of pocket - and some with overdrawn bank accounts, after a blunder relating to mortgages.
Customers have been left out of pocket after their mortgage interest relief was not paid in February.
AIB says the problem is due to an agreement it has with the Revenue Commissioners for paying tax relief at source.
It said the issue affected customers who pay their mortgage on the last day of the month.
In February the last day of the month fell on a Saturday and because the next working day was in March that tax relief could not be paid.
It is understood the bank has told customers it will pay this money back to them over the course of the year.
In his analysis of mortgage rates across Brendan Burgess who heads up the consumer forum askaboutmoney.com writes: "A legal cap on mortgage rates is a last resort, but we have reached that last resort.