Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I make the general point that it is instructive that, though AIB has a higher cost of funds and blended cost of funds, it has managed to reduce its variable rate to effectively the lowest in the market, whereas other banks that have a much lower cost of funds stand over much higher variable rates. This proves the point that there is scope in the case of a number of other banks to reduce their rates.

I want to raise the issue of the tracker redress programme. I have a copy before me of the clause in the mortgage contract in which it is clearly stated that at the end of the fixed interest rate period, the customer may choose from a further fixed interest rate period, conversion to a variable interest rate or conversion to a tracker interest rate mortgage loan. It is the customer's choice. However, those who choose the tracker option are being offered a rate of 3.67% plus ECB. Many customers feel that this is an arbitrary rate which is broadly in line with AIB's variable rate offering, even slightly more expensive. Can the witnesses explain the rationale behind this and why AIB is not offering such customers what would be regarded as a prevailing tracker rate in the market today of roughly 1%?