Group to call for legal cap on variable mortgage rates

A group campaigning for the reduction of variable mortgage rates will call for a legal cap on the amount banks can charge borrowers at a meeting in Dublin on Thursday evening.

The SVR Campaign, led by consumer advocate Brendan Burgess, is hoping to get Irish based banks to reduce their mortgage rates. One of the suggestions to be proposed as a way of achieving this is for the government to apply a cap of 3 per cent on the amount banks can charge standard variable rate (SVR) customers. Other topics to be discussed include the postponement of the sale of AIB until a normal mortgage market is in place; a boycott of ancillary products such as credit cards and insurance products sold by the mortgage lenders; putting forward candidates in the general election; and the potential for a new entrant to come into the Irish market.

It is understood that some 300,000 mortgage holders are currently on standard variable rates.

“If most of those are joint mortgage holders, that’s 500,000 people affected,” Mr Burgess said.

SVR rates were a hot topic at last week's Oireachtas finance committee, with bank chief executives questioned as to why SVRs at the state banks were above 4 per cent when the average tracker is just over 1 per cent and the average SVR across the euro zone is 2.47 per cent. The rate differential means that someone with a € 300,000 mortgage on an SVR has to pay almost € 650 a month more than someone on a low cost tracker mortgage.

While AIB announced a cut of up to 0.38 per cent on SVR mortgages last week, Mr Burgess noted the bank is still charging up to 1.5 per cent more than it is charging in Northern Ireland.

The event will be held in Ballsbridge Hotel at 7.30pm on Thursday evening.