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

I thank the Minister for his reply.

Most people understand "variable rate" to mean that the rate will vary in line with market conditions. I am sure the Minister will agree that the banks would not be too slow in hiking up their variable interest rate if conditions deteriorated in terms their cost of funding, for example. Therefore, the rates need to come down. It is very clear now that Bank of Ireland, Ulster Bank and a number of other banks are playing hardball. They are not just going to roll over when they are called in to a meeting in the Department of Finance. Therefore, the Minister for Finance will need to have a plan B.

The AIB reduction is very welcome. It is modest but a step in the right direction. We need further rate cuts. A 1% cut in standard variable rates across the board would put about €400 million into the pockets of mortgage holders throughout the country, or 300,000 families. That would be a very significant boost and stimulus to the domestic economy. There is clear discrimination against existing customers. Bank of Ireland, Permanent TSB and KBC charge 4.5% to existing customers but significantly lower rates to new customers. That is simply unfair. The Minister needs to outline what he will do to bring competition into the market. What will be his message to the Central Bank and the banks when he gets around to meeting them?

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