Now EU tells banks not to cut variable mortgages
Published 08/07/2015 | 02:30
The European Commission has backed the hard line being taken by Irish banks in their refusal to slash variable mortgage rates for tens of thousands of families.
As EU leaders gave Greece until Sunday to come up with new bailout proposals to stay in the euro, the Commission said our bailed-out banks should be allowed to profiteer on the back of mortgage holders.
A draft report by the European Commission, seen by the Irish Independent, warned that the "continued pressure" being placed on banks to cut mortgage interest rates may undermine the stability of Ireland's financial sector.
Despite acknowledging that variable rates in this country are "relatively high", EU officials warned against intervention that "may undermine financial sector stability by reducing profitability and impact privatisation prospects".
The assessment by the powerful EU body will make it more difficult for the Government to convince banks to pass on rate cuts to their customers.
Borrowers in this country are still paying around twice the eurozone average on a variable-rate mortgage.
This latest setback for hard-pressed homeowners came as Greek Prime Minister Alexis Tsipras won a commitment to seek a last-ditch rescue before the country's banks run out of money.
Italian Prime Minister Matteo Renzi said EU leaders would hold a further summit on Sunday to approve a plan to aid Greece if creditors are satisfied with a Greek loan application and reform pledges. "The ball is in Greece's court," he said.