Opposition politicians have called on the Government to provide greater protection to homeowners from banks that are proposing to increase mortgage interest rates.
It followed media reports today that Permanent TSB is planning to raise its standard variable interest rate by 0.5 per cent in near future. Permanent TSB has not confirmed the plans.
Permanent TSB is not participating in the Government's "bad bank" scheme, the National Asset Management Agency. However, it is covered by the bank guarantee scheme introduced by the Government. If Permanent TSB proceeds with the increase, other lenders are expected to follow the bank's lead.
Fine Gael’s finance spokesman Richard Bruton called on Minister for Finance Brian Lenihan to seek greater protection from banks in receipt of public funds.
“In return for providing this blanket support, taxpayers have a right to expect financial institutions to think twice before imposing new costs on households and businesses. This is particularly important when so many workers are facing pay cuts and shorter hours in an attempt to restore lost competitiveness," he said.
He urged Mr Lenihan to negotiate a deal with banks to protect mortgage holders at this very difficult time.
“There is an urgent need for the Government to come up with a modern and fair way of balancing the interests of lenders and borrowers. A raft of emergency legislation has been published in the last 12 months to protect the interests of banks and financial institutions," he said.
“Ultimately, large sums of money are being spent on enforcement, imprisonment and disqualification of people who should enjoy greater protection. No-one benefits from this practice, which is counterproductive to economic recovery. It must be reformed.”
Labour finance spokeswoman Joan Burton accused Irish banks of "ploughing ahead to turn the screw" on homeowners, and said raising interest rates would put more financial pressure on families.
“Quite simply, this is a crude attempt to boost the bottom line of the bailed-out banks on the backs of ordinary homeowners,” she said.
She called for a moratorium on home repossessions.
“The interests of banks’ bondholders and shareholders are being allowed to take precedence over ordinary homeowners struggling to pay their bills and keep a roof over their heads,” Ms Burton said.
“People who took on mortgages in good faith to set up a home are now at the mercy of the very banks that their taxes are being used to bail out.”
