Finally, hard-pressed borrowers get a break
John Steinbeck, in his Great Depression epic the 'Grapes of Wrath', wrote: "The bank - the monster has to have profits all the time. It can't wait. It'll die. No, taxes go on. When the monster stops growing, it dies. It can't stay one size." Many Irish mortgage holders over the last number of years would probably share the 1962 Nobel Prizewinner's view, given the crushing burdens of their home loans. In Ireland, you are likely to find yourself paying some €2,500 more a year than your fellow eurozone members should you have a variable rate mortgage.
Michael Noonan has repeatedly threatened to take action but his words seem to merely bounce off the banks, reverberating in a brazen echo. But finally it would appear borrowers are about to get a well-deserved break. The trajectory of variable rates seems to be about to change. A combination of irresistible forces from competitors, as well as looming legislative changes, have turned the tables on the financial institutions, leaving them with little choice but to act. The AIB has turned the screw on its rivals with a fourth 0.25pc reduction in its variable rate in the past 18 months. The cuts come against the backdrop of a Fianna Fáil bill aimed at turning the Central Bank into an enforcer on rate cuts. There was also good news for hard-pressed homeowners on another front: on the issue of mortgage arrears, the Government has performed a U-turn to ease the burden. Under a deal hatched between Fine Gael, Fianna Fáil and Independents, those in mortgage default will be able to challenge their bank. They will now be able to turn to an independent body should the bank reject genuine efforts to restructure their repayments.
They say to be able to do the right thing when no one is looking as opposed to doing it out of fear of consequences are two different things. Such fine moral arguments are best left to the philosophers - hard-pressed homeowners won't be looking this gift horse in the mouth.