Pass on ECB interest rate cut, Kenny warns banks
BANKS were warned yesterday by Taoiseach Enda Kenny that he will introduce new laws to force them to pass on European Central Bank (ECB) interest rate cuts.
And the Central Bank upped its pressure on lenders which are refusing to pass on Thursday's ECB cut to clients with variable-rate mortgages.
Some 200,000 people have variable rate mortgages.
Yesterday, Bank of Scotland/Halifax and Irish Nationwide joined Permanent TSB and KBC Bank in agreeing to pass on the ECB cut to their variable rates.
But most other lenders were still refusing to ease the pressure on those with variable rates.
While homeowers with tracker mortgages automatically get reductions in the ECB rate, banks can decide whether or not to pass on changes to variable-rate customers.
Thursday's 0.25pc rate cut has left a homeowner with a €200,000 mortgage some €30 better off a month.
Yesterday EBS, Bank of Ireland, Ulster Bank, National Irish Bank and Start Mortgages refused to say if they wold drop their variable rates, insisting they were "reviewing the rates".
But Mr Kenny said he was prepared to consider introducing legislation which would compel banks to pass on interest rate cuts.
And the Central Bank called on lenders to pass on rate cuts. It admitted it had no direct powers to force lenders to do so, but warned that it would seek new powers if necessary.
EBS, now part of AIB, said no final decision had been made about variable rates. Its variable rate of 4.93pc is one of the highest and unlike other lenders, most of its mortgage holders are on variable rates. WIth other lenders, most mortgage holders are on trackers.
AIB said its variable rates were "under constant review".
However, it seems unlikely the bank will pass on this week's eurozone rate cut as it did not increase variable rates when ECB rates went up twice earlier this year.
Bank of Ireland said it was reviewing its variable rates, while subprime lender Start said it reviewed "customer rates on a regular basis in line with market pricing".
National Irish Bank said it would not be changing its variable rate.
Bank of Scotland will cut its variable rate to 2.9pc, while its sister bank Halifax is cutting the variable to 2.75pc.
Irish Bank Resolution Corporation, which has taken over the mortgages that were in Irish Nationwide, said it was passing on the full 0.25pc eurozone cut. Its new variable rate will be 4.15pc.