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Irish Banks are still dragging their heels on variable mortgage rates – Hayes

Irish Banks are still dragging their heels on variable mortgage rates – Hayes

 Banks have only reduced variable rates by less than half a percent in one year

Brian Hayes MEP today commented on recent figures from the Irish Central Bank which shows that Irish variable mortgage rates are still well above the Eurozone average.


“Irish consumers are still paying over the odds and getting less on deposits than consumers in the rest of Eurozone. The Central Bank released figures on Friday 14th October showing that for all new variable mortgages (excluding renegotiations), the average interest rate is 3.47%. The equivalent rate in the Eurozone is 1.87%. However, it is very welcome to see that today KBC is making reductions to its variable and fixed rate products with some rates as low as 2.9%. This is a welcome sign of healthy competition coming into the market. If they can move in this direction, then others can too.

“In September 2015, the Central Bank showed that the average variable rate in Ireland was 3.96%. This reveals that in the space of a year, Irish banks have only reduced their variable rates by 0.49%. This is particularly frustrating given that in March 2016 the ECB reduced its main interest rate to zero. This effectively shows that Irish banks are still dragging their heels on the variable mortgage crisis and this is having a hugely negative impact on mortgage holders.

“Moreover, it’s not only mortgages where consumers are getting ripped off – Irish banks are offering much poorer returns on deposits than their Eurozone counterparts. The average deposit interest rate in Ireland now is 0.15% while in the Eurozone it is 0.53%.

“There is the problem that tracker mortgages remain a drag on the profitability of Irish banks but this should not be a justification to give variable mortgage rate customers such a bad deal.

“Based on the Central Bank’s recent figures, Irish variable mortgage rates have on average remained between 3% and 4% since 2011. During this five year period, the main ECB interest rates has come down by 1.5%. The average rate for a variable mortgage in the Eurozone has come down by around 1.5% since 2011 which shows that other Eurozone banks are clearly linking their mortgages rates closely to the ECB interest rate. It is quite scandalous that Irish banks are not doing the same.

“I have regularly brought this issue up at a European level and I am glad to see the European Commission examining the possibilities of a cross-border market for mortgages. The European Commission recently conducted a consultation on ways to improve retail financial products in the single. The results of this consultation have recently been published and they show that half of banks and industry associations in the EU believe the more can be done to develop a cross-border market for mortgages in the EU.

“This means that an EU market for cross-border mortgages is becoming more and more likely. I am confident that new Commissioner for Financial Services Valdis Dombrobskis will examine possible ways in which obstacles to obtaining a cross-border mortgage in the EU can be removed.

“One way in which cross-border mortgages could become a reality is by using the French surety model where mortgage default risk is outsourced to insurance companies. This would help to get past the problem of insolvency risk which is seen as the main barrier to banks providing cross-border mortgages.”

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