Thursday 14 November 2019

AIB could cut variable rates for 140,000 mortgage holders by June: Duffy

David Duffy, AIB
David Duffy, AIB

Donal O’Donovan

AIB could cut the standard variable rate it charges borrowers in the coming months, if the bank’s cost of funds, risk and operating costs reduce, David Duffy has told Finance Committee

The bank accounts for about 140,000 of the country’s 300,000 standard variable mortgages, which have attracted huge criticism because of interest rates that are a multiple of the cost of debt for other mortgage borrowers here and abroad.

AIB chief executive David Duffy said the bank’s charges reflect its costs but these are now falling, potentially enough to justify a reduction in rates in June.  

“If we see the same positive trends then we will be in a position to cut the rates.

Mr Duffy said the bank has no position on whether the Government should reduce the length of bankruptcy from three to one year, but does not see any “fundamental problem” with such a change.

The Government has been embroiled in controversy over the high cost of Irish loans for the roughly 300,000 customers with standard variable-rate mortgages.

Finance Minister Michael Noonan met Central Bank Governor Patrick Honohan recently to see if pressure can be brought to lower variable rates.

Irish lenders have been reluctant to pass on ECB rate cuts to their mortgage customers.

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