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NIB snubs euro call for mortgage cut - with 1pc rate hike

MORTGAGE holders were hit with unwelcome news that a leading lender plans to push up its rates by 1pc instead of passing on the recent ECB cut.

The Financial Regulator and the Government have been pressurising banks to pass on the reduction to more than 200,000 homeowners on variable rates.

The rate cuts introduced by the ECB should be for the benefit of homeowners, the Central Bank said last week.

But Danish-owned NIB is refusing to pass on the eurozone cut and is poised to impose an increase. The bank's different variable rates could rise by up to 0.95pc which will leave NIB's variable rates at between 4.35pc and 4.6pc.

A family with a €200,000 mortgage with NIB will see their monthly repayments go up by €100 as a result.

The move is seen as a direct challenge to the Government and Central Bank. But representatives argued that the cost of funding is not based on the ECB rate, but on other market costs.

They added that the changes in no way relate to any ECB interest rate fluctuations as the bank does not rely on the ECB for funding.

Taoiseach Enda Kenny has previously indicated that he may look at introducing legislation to compel banks to pass on interest-rate cuts. He warned banks that if they did not pass them on voluntarily, the Government would tell Financial Regulator Matthew Elderfield to force them to move on rates.