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Banks told to pass rate cuts on to families

PRESSURE was today mounting on the country's big banks to pass on interest rate cuts to struggling families.

Families received a boost yesterday when the European Central Bank (ECB) cut its interest rate from 1.5pc to 1.25pc.

While the move will save 400,000 tracker mortgage holders up to €30 a month, thousands of others on variable rate mortgages look unlikely to benefit.

Experts are now predicting that mortgage holders could be in line for two more interest- rate cuts in the coming months.

But the pressure on banks such as AIB, Bank of Ireland and Ulster Bank has intensified today, with politicians from all parties demanding that the cut be passed on to all hard-pressed families. Despite Permanent TSB and KBC Bank imposing the reduction on its variable rate, some of the country's bailed-out institutions have given point-blank refusals to follow suit.

Ulster Bank said there were "no planned changes to our variable rates" while Bank of Ireland said it was too early to make a decision.

"All our rates are in regular review," it said.


AIB also refused to make any firm pledges - claiming that it had not imposed increases since last summer.

"Unlike all of its main competitors, AIB has not increased its standard variable rates since August 2010. Our standard variable rate for owner occupiers is currently 3.25pc," according to the bank. However Finance Minister Michael Noonan has warned banks that a failure to pass on the reduction may result in action being taken by the State's financial watchdog.

"(The reduction) will automatically pass with trackers, but I think the Regulator, Matthew Elderfield, has already made it clear that he will intervene if he thinks that rate cuts in Europe are being absorbed by the banks rather than being passed on to customers," he said.

Mr Elderfield's office confirmed that it would "investigate" banks that don't pass on the cut. "We cannot force the banks to pass on decreases. However, if banks do not pass on the cuts, we will seek powers so that we can intervene."