The announcement today by AIB to reduce its Standard Variable Rate (SVR) mortgages for owner occupier and buy-to-let customers by 0.25 per cent was welcomed by MEP Marian Harkin but she noted that much more significant reductions to Standard Variable Rates by all Irish banks needed to occur to bring them in line with their Eurozone counterparts.
Speaking in the European Parliament following the announcement she said: "I am happy that AIB will be reducing its standard variable mortgage rate by 0.25 per cent from 1st July 2016 however this will only bring AIB's rate to 3.4 per cent which is still over 1 per cent higher than the Eurozone average. This is despite the fact that interest rates in the Eurozone are at historically low levels."
She continued: " Last month, all Irish MEPs wrote to the President of the ECB, Mario Draghi and Minister for Finance, Michael Noonan calling on them to conduct an investigation into the Irish banking system to see why the main ECB refinancing rate is not being passed on to Irish customers.
"As it currently stands, the Irish mortgage market has six main players and all charge similarly high rates for standard variable mortgages while offering very low deposit savings rate to Irish customers. Such actions by the banks clearly show that, on the one hand, they are happy to pass on the ECB low interest rates to customers who wish to save but, on the other hand, refuse to pass on low interest rates to customers who borrow. This practice is discriminatory and uncompetitive toward Irish consumers.
"This imbalance needs to be addressed and a proper investigation into the Irish mortgage market by the ECB or the Irish Central Bank needs to occur. In the meantime, all Irish banks need to reduce their rates for standard variable mortgages so that they accurately reflect current ECB interest rates", Marian Harkin concluded.