Aodhán Ó Ríordáin (Dublin North Central, Labour) | Oireachtas source

I thank the Minister for being here in person to discuss this issue with me. As he will be well aware, Allied Irish Banks is 100% in State ownership. Yesterday it announced it was adding 0.4 percentage points to its standard variable mortgage rate and raising variable rates at EBS by 0.25 percentage points. As the Minister will know, this move by AIB will adversely affect 70,000 AIB variable rate mortgage holders and put struggling households under further pressure. AIB's average variable rate mortgage is around €130,000 and this rate increase will mean an increase of almost €300 annually for its variable rate mortgage holders. AIB's standard variable customers absorbed a total increase of 1 percentage point in their mortgage rates in 2012. AIB will say that the decision to raise its variable rates is driven by the need to ensure that the bank's lending is at a sustainable level long-term. However, this is the same bank into which the taxpayers of this State have pumped €21 billion during the past four years. It is true to say that AIB has been at the lower end of mortgage lending but there is a genuine concern that it is the variable rate mortgage holder who is being asked to pick up the tab and is being unfairly hit. There is obviously a connection between this announcement and the expected announcement next week from the ECB of a reduction in interest rates, which will be welcomed by those on tracker mortgages. However, it is clear that what AIB and other banks are doing is robbing Peter to pay Paul, and that in order to absorb whatever move the ECB makes, variable rate mortgage holders will be asked to pick up the tab.

Considering our relationship with this bank, the €21 billion we have put into it, the level of resentment in Irish society about what the Irish taxpayer has had to do to save it and the amount of pressure mortgage holders are under, any mortgage holders who listened to radio reports or read newspaper articles on the rate increase this morning would have got a cold shiver down their spines when they realised that mortgages they find almost impossible to service will be even more difficult to service as a result of this announcement. Is there a plan to break the toxic link between the pressure faced by those on variable mortgages and those on tracker mortgages? There is obviously a connection between what the ECB will do next week and what AIB did yesterday. Does the Minister have any words of comfort or a direct message of comfort to offer to those who are paying variable rate mortgages and who will do so for the foreseeable future? Mortgage holders who heard yesterday's announcement will have thought about the 1% they were asked to contribute last year. There is a further increase now and they are wondering what is around the corner in terms of what more they might be expected to contribute. Every time there is word from the ECB about a lowering of interest rates, they will expect an increase in their variable mortgage rate.

I ask the Minister directly if there is a plan to break this link. Is there some effect he can have on the situation? What words of comfort can he offer those mortgage holders who are literally terrified not just about yesterday's announcement but about what is to come in the coming months and years?

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