Sunday 17 December 2017

Government 'can't stop mortgage hikes'

People who have standard variable rate mortgages, where the interest rate can change at any time, have been hit with up to three hikes in mortgage rates by all the leading lenders. Photo: Getty Images
People who have standard variable rate mortgages, where the interest rate can change at any time, have been hit with up to three hikes in mortgage rates by all the leading lenders. Photo: Getty Images

Charlie Weston Personal Finance Editor

THE Government admitted yesterday that it is powerless to stop banks and building societies "fleecing" mortgage customers.

The Department of Finance insisted that it had no control over lenders when it comes to setting mortgage rates.

This is despite the fact that taxpayers' money has been poured into AIB, Bank of Ireland, Irish Nationwide and EBS.

All the Irish lenders have also benefited from a blanket state guarantee covering their borrowings and customer deposits.

A spokeswoman for the department said it did not get involved in the day-to-day running of banks and building societies.

People who have standard variable rate mortgages, where the interest rate can change at any time, have been hit with up to three hikes in mortgage rates by all the leading lenders.

Now, a group that monitors the activities of the Financial Regulator has said homeowners were being "mercilessly fleeced" so that banks could rebuild their balance sheets.

The Consumer Consultative Panel said householders who do not have a tracker mortgage were being singled out.

Rates

The panel said Irish consumers were being forced to pay higher rates than before the economic crisis hit -- while consumers in other countries were enjoying historically low interest rates.

It said mortgage holders who do not have a tracker rate were being treated as "second-class citizens" by being forced to pick up a disproportionate share of bank rescue costs.

It added that vulnerable consumers must be protected from the possibility of banks working together to set charges.

However, a spokesman for the Irish Banking Federation insisted that mortgage rates in this country were low compared with other EU countries.

The spokesman added that the average mortgage rate here was 3pc, the fifth cheapest of the 15 eurozone countries.

A spokeswoman for the Financial Regulator said it did not have the power to force institutions to pass on interest rate cuts or to prohibit interest rate increases.

Irish Independent

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