Lenders refusing to pass on cut despite AIB U-turn
THREE banks were last night coming under renewed pressure to pass on interest rate cuts to struggling mortgage holders.
Bank of Ireland (BoI), Ulster Bank and National Irish Bank are the only three lenders here still holding out and are refusing to pass on last week's 0.25pc interest rate cut by the European Central Bank (ECB) to those on variable rate mortgages.
The banks were digging in yesterday in the wake of a surprise u-turn by AIB to pass the rate cut on.
That came 24 hours after managers insisted they would not pass on the rate cut.
Bank of Ireland, Ulster Bank and National Irish Bank insisted yesterday that their position had not changed.
National Irish Bank said it was going ahead with its plan to raise standard variable and other rates by up to 0.95pc.
Spokeswomen for Bank of Ireland and Ulster Bank said that their rates continue to be under review.
All remaining lenders, Permanent TSB, EBS, KBC Bank, Irish Nationwide and Bank of Scotland, have already indicated they will pass on the cut.
The ECB is expected to announce a further interest rate cut as early as next month and this will make it even more difficult for lenders to resist calls to pass on cuts.
However, BoI was standing firm and yesterday admitted it had suffered a "deterioration" in mortgage arrears among its customers in recent months.
It said it had already suffered "some deterioration" in mortgage arrears in August and September, which "may have been partly attributable" to new rules on dealing with arrears and "the fact that there was considerable public speculation about potential policy measures regarding customers in arrears".
However, consumers' groups said that urging the lenders to pass on the cut has not worked so they must be forced to do so.
Dermot Jewell, chief executive of the Consumers' Association, said it was perhaps naive to expect the three lenders to row in behind their competitors and "show a spark of decency".
"It does beggar belief that every single ECB increase was passed on without exception, yet a relatively small decrease is held on to greedily.
"It is a matter or urgency that the cut is passed on," he added.
Meanwhile, Goodbody Stockbrokers warned that international investors might not invest in Irish banks if they see the government controlling what interest rates they can charge.