Help needed for those on sky-high variable mortgage rates.
TAOISEACH Enda Kenny has no plans to force banks to reduce sky-high variable mortgage rates, beyond asking them to show their customers “a degree of understanding”.
Mr Kenny appeared to be laying the groundwork for a U-turn on the Government stance that it cannot intervene in the day-to-day workings of the banks yesterday, by saying he would put pressure on them to cut variable rate holders some slack and pass on lower European Central Bank rates.
“I expect the banks to do better than they have been doing in respect of variable mortgage interest rates,” he said.
However, his spokesperson said there was “nothing further to add” when questioned last night as to what Mr Kenny would do if banks didn’t reduce home-loan payments.
More than 300,000 families on variable rates are paying interest rates that are four times higher than those on tracker rates.
Showing up Mr Kenny’s weak position, Finance Minister Michael Noonan insisted he has no actual legal powers to allow him to act.
However, Mr Noonan is expected to meet with the Central Bank governor today to discuss the issue.
“I will again speak to the governor of the Central Bank and ask the bank to see what influence they can bring to bear, to bring the variable mortgage rates closer to the cost of funds,” said Mr Noonan.
Variable rates here are more than double those charged elsewhere in the eurozone.
The gap in what is being charged means that a family with 20 years left to pay on a €200,000 mortgage, on a variable rate, is paying €4,000 more a year than a family with a tracker owing the same amount.
And the rates being charged to new mortgage customers are €600-a-year less than to existing variable rate mortgage payers.