Éamon Ó Cuív (Galway West, Fianna Fail)

Before the election last year, the Labour Party and the Fine Gael Party made promises to distressed mortgage holders. We have had a number of reports but limited action. The Government also stated after the election that it would act decisively, forcefully and effectively with the banks and others in the interest of those who have difficulty paying their mortgages. We are all aware that the European Central Bank reduced its interest rate in November and December. While some banks took longer than others to do so, most of them reduced the interest rate they are charging mortgage holders. Permanent TSB has 115,000 mortgage holders, approximately 40,000 of whom are on variable mortgages or fixed rate mortgages that will come to an end in the near future. It is charging a rate of 5.19% on a variable mortgage, whereas Allied Irish Banks is charging 3.04%, Bank of Ireland is charging 3.55% and even the rate charged by Ulster Bank, which is not a covered institution, is cheaper at 4.9%. I understand Permanent TSB charges the highest interest rate on a variable mortgage not only in Ireland, but in Europe.

Let us consider the effect this has on people. If a person has a mortgage of €200,000, the interest due on a rate of 5.19% is €200 per week. On an interest rate of 4%, the interest due falls to €154 per week. Charging the AIB rate of 3.04% would reduce the weekly interest to €116. Imagine the difference between €116 per week and €200 per week for a hard pressed mortgage holder. Permanent TSB, one of the covered institutions, is 99% State owned. People are trapped with this mortgage provider because they cannot move to other lenders which will not lend to people in negative equity. It is despicable behaviour on the part of Permanent TSB to charge this rate.

I give credit to the Minister for Finance, Deputy Noonan, for using his powers of persuasion with Allied Irish Banks which reduced its interest rate to 3%. What will the Government do to reduce the Permanent TSB mortgage rate? Imagine the relief it would give a large number of people if the rate could be reduced to the level charged by AIB. The most effective relief one can give to mortgage holders is to reduce their repayments permanently by reducing the interest rate.

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