Banks under fire for failing to pass on full rates cut
THREE banks were last night accused of profiteering on the backs of mortgage consumers after they failed to pass on all of Thursday's cut in European Central Bank interest rates.
Ulster Bank, and its sister operation First Active, said they would be passing on only a fraction of the ECB interest rate cut to their variable rate mortgage customers.
Most banks said on Thursday that they would be passing on the savings after rates came down by 0.5pc.
But National Irish Bank said its rates on variable rate mortgages will remain unchanged.
Ulster Bank said interest rates on its standard variable rate mortgages will come down by just 0.25pc. This is half the savings going to customers of other lenders who have passed on the full 0.5pc reduction.
Director of the Irish Mortgage Corporation, Frank Conway, said this was unacceptable.
"Banks that are not passing on the rate cut, or only passing on a portion of it, are profiteering on the backs of consumers."
Fine Gael's enterprise spokesman Leo Varadkar had said it would be "unconscionable" for any banks to hold on to the interest rate cut.
Also coming in for criticism yesterday was Bank of Ireland, and its subsidiary ICS Building Society, after a decision to scrap a discount interest rate offer for first-time buyers.
Mr Conway of Irish Mortgage Corporation accused Bank of Ireland of implementing a de facto interest rate increase.
But a spokeswoman for the bank strenuously denied it was imposing a rates rise.
"Bank of Ireland and ICS Building Society have not introduced any rate increases over the last number of months. Effective 6th March, 2009, Bank of Ireland and ICS Building Society removed the promotional one-year discount that prevailed on our variable loan-to-value based product range."
- Charlie Weston Personal Finance Editor
