Banks 'discriminating' against variable mortgages holders

Fianna Fáil finance spokesman Michael McGrath has said people with variable rate mortgages should be "up in arms" because they are being "discriminated against" by banks.

The Cork TD said that the Government and the Central Bank were doing nothing to help those paying up to €1,000 a year more than those availing of offers available to new customers and €6,000 a year more than people on tracker rates.

“I think we have to recognise what is happening here. We have blatant discrimination being perpetrated by the banks against standard variable rate mortgage customers with the consent and blessing, it would appear, of both the Government and the Central Bank,” Mr McGrath said.

Mr McGrath said his party had raised the issue repeatedly with banks, the Central Bank and the European Central Bank (ECB) and "so far with precious little satisfaction, I have to say".

Mr McGrath said the “exorbitant” rates applied to standard variable rate customers were unfair and unjustified, and that the recent trend towards cutting variable rates for new customers had brought the issue into sharper focus.

“There is no evidence whatsoever that either the Government or the Central Bank are even applying soft pressure on the banks to put manners on them in respect of the rates that are being charged on standard variable rate customers.”

Fianna Fáil motion

Mr McGrath was speaking to reporters at Leinster House ahead of a Dáil discussion on a Fianna Fáil motion calling on the Government and the Central Bank to help variable rate mortgage customers.

“It simply is not acceptable that one group of customers are being targeted in this way to extract maximum profits from them.

“Existing variable rate customers in particular are the subject of the most blatant form of discrimination, where the banks have reduced rates for new customers but not for their existing standard variable rate customers.”

Mr McGrath said such mortgage-holders in Ireland were paying about two per cent more than similar customers in other Eurozone countries.

“That makes an enormous difference to a monthly repayment, to the amount of the repayment every year and over the lifetime of the mortgage [this difference] runs into the tens of thousands of euros.

“People should be up in arms about the way they are being ripped off by the banks in Ireland in terms of standard variable rate mortgages . . . we’re putting a spotlight on the issue here.”

Mr McGrath said the Government had not met the banks officially for more than three years at a time when people were being “gouged” by the institutions.

The spokesman called on the Coalition to exert pressure on the banks, adding that Minister for Finance Michael Noonan should engage directly with the institutions to persuade them to reduce variable rates "in line with their falling cost of funds".

Mr McGrath said he also endorsed “product innovation” to make “switcher” mortgages more widely available.