FF Call On Central Bank To Directly Engage With Mortgage Providers

The Central Bank has been urged to engage directly with mortgage providers in an effort to secure a reduction in the standard variable rate.

Making the call Fianna Fáil finance spokesperson Michael McGrath said that "it is clear that there is a wide and growing disparity with existing customers on SVRs very much at the bottom of the pile."

He added: "While the impact of reduced ECB rates has helped many households cope with the squeeze on family finances, the benefit has largely been limited to those on tracker mortgages.

"Customers on variable rate mortgages have seen a far smaller reduction in their monthly repayment.

"The average difference between tracker mortgages and a comparable SVR product is now over 3%. Recent reductions in variable interest rates were, at first glance, an overdue injection of some competition in to the stagnant Irish mortgage market.

"However, the vast majority of customers do not benefit as the rates are typically only available to new customers.

"Banks should now make it clear that these new lower rates will be available, not just to first time buyers, but also to potential new customers wishing to switch their mortgage from another bank.

"At Oireachtas Finance Committee hearings with senior bank executives, we were told that the actual level of switcher mortgages was minimal with both Bank of Ireland and permanent TSB saying they represented only a tiny fraction of overall mortgage activity. Failure to make switcher mortgages available on a widespread basis will only further fuel the view that the banks are more interested in optics than in providing a genuinely competitive mortgage market.

"A peer review of the Irish Central Bank published this week indicated that the Central Bank needed to do more to protect the interests of consumers. A good start would be to immediately bring in the banks and tell them in no uncertain terms that they need to change course in how they treat the hundreds of thousands of customers who remain on standard variable rate contracts."

(MH/IT)