BOI 'deliberately' keep variable rate mortgages high to incentivise customers to switch to fixed term loans
Bank of Ireland has admitted its variable rate home loans are being kept deliberately high, and said it is to encourage customers to switch to fixed rate deals.
Mortgages costs in Ireland are the highest in the Eurozone.
The chief executive of Bank of Ireland, Richie Boucher, told a Dail Committee that his bank wants more people to take out fixed rate mortgages as a protection against future interest rate rises.
Bank of Ireland customers can pay up to 4.5pc interest for variable rate loans, compared to 3.5pc for fixed term loans.
“We are deliberately incentivising customers to switch to fixed rate,” Richie Boucher told the Oireachtas Finance Committee.
He said there is nothing to stop existing customers leaving higher cost variable rate mortgages.
“Every one of our existing customers can avail of a fixed rate and everyone of our existing customers could save money by going to a fixed rate,” he said.
“If it was my decision I would do it,” he added.
For new mortgages, the bank said the bulk of exceptions granted to buyers allowing them to get around the strict Central Bank mortgage rules are given to Bank of Ireland customers.
In relation to mortgage arrears, Richie Boucher said the rate of repossessions is likely to rise, but that he does not expect a spike in 2017.
“I think it’ll be over a long, drawn out period,” he said.