Noonan to be quizzed on banks' reluctance to reduce variable mortgage rates
Finance Minister Michael Noonan is set to be quizzed by TDs and senators on why banks have been so reluctant to reduce variable mortgage rates.
Variable mortgage rates have come down by an average of just 0.3pc in the last year, despite the minister calling banks into his office, and extensive political pressure on lenders.
Some 300,000 homeowners are on variable rates, which are around 1.5pc higher here than in other Eurozone countries.
Fianna Fáil got a private members' bill through the Dáil to give the Central Bank powers to control variable rates.
Mr Noonan is due before the Oireachtas Finance and Public Expenditure and Reform Committee tomorrow as part of its pre-legislative scrutiny of the bill, known as the Central Bank (Variable Rate Mortgages) Bill 2016.
Claims in May by Mr Noonan that the bill is unconstitutional, and that there was no need for it, are set to be tested by the committee members.
The committee is also set to be addressed by Brendan Burgess of the Fair Mortgage Rates Campaign, and homeowners Conor McNally and Stefan Goor.
Father-of-four Mr McNally has a variable rate mortgage with Permanent TSB. The carpenter will tell politicians he got into arrears when the construction industry went into meltdown, a time when the Permanent TSB rate hit 6.25pc.
Mr Goor will tell the committee he is annoyed that soon after he took out a variable rate mortgage with KBC Bank the rate was cut, but he did not benefit from this as the reduction was for new customers only.
Variable rates have come down by 0.3pc to an average of 3.47pc in the past year, according to Central Bank figures.
But since the Fair Mortgage Rates Campaign began, variable rates have come down by more than 1pc, Mr Burgess said.
"Bank of Ireland has not cut its variable rates, so many of its customers are still paying 4.5pc.
"Permanent TSB has not cut its SVR, so many of its customers are still paying 4.5pc. Danske Bank has not cut its standard variable rate of 4.95pc.
"Most lenders have cut mortgage rates, but only by a fraction more than their counterparts in other Eurozone countries," Mr Burgess said.
Investec Bank analyst Bank Owen Callan said there is scope for banks to cut rates further.