Amid growing concern over the very high cost of variable rate mortgages, Minister for Finance Micheal Noonan is asking Central Bank governor Patrick Honohan to seek action from the banks to deliver rate cuts. The Central Bank has been insisting, however, that it will not seek the power to set rates, as such a move would curtail competition in the market, report Stephen Collins and Arthur Beesley.
While the European Central Bank brought its main interest rate close to zero last year, Irish banks failed to pass on the benefit to variable rate customers.
Cliff Taylor writes that while the cost of funds for banks has been coming down, variable rates for existing borrowers remain high, running from 4.15 per cent to above 4.5 per cent. "In contrast, the lucky tracker mortgage holders are now paying rates averaging 1 per cent. Of course the reality is that the high rates being paid by the variable rate customers are subsidising the trackers.who pay more than 4 per cent on average."
Do you think the Government should force banks to cut variable mortgage rates? Vote Yes or No and write your comments below.