Timmy Dooley (Clare, Fianna Fail) | Oireachtas source

Reports this morning that the banks will not reduce the variable interest rate on mortgages make for disturbing reading. As the Tánaiste is well aware, there are over 300,000 variable rate mortgage holders in Ireland paying, on average, 2% higher than anywhere else in Europe. That is an extra €4,000 per year that is putting an intolerable burden on many families. If this is not addressed, it will lead to more home owners finding themselves in arrears.

There is a German group of MPs who have been visiting the Houses for the past two days and they are in the Visitors Gallery at the moment. They are members of the Friends of Ireland in the Bundestag and I had the pleasure of meeting them this morning. It would not be an overestimation to say they are somewhat amazed that mortgage holders here are paying 4.5% in interest, as opposed to 2% in Germany. The Minister for Finance, Deputy Noonan, met the Governor of the Central Bank on behalf of the Government and expressed its concern at a routine meeting approximately one month ago. The Governor indicated he would prepare a report by June. At the time, the Tánaiste said she believed a levy should be placed on banks if they did not address or reduce the variable interest rates.

Representatives of AIB have come before the finance committee and offered a cut of 0.25%. That is something but it is by no means enough when one considers the extent to which banks are gouging mortgage holders, as the amount they take is well above the cost of funding. Representatives of PTSB were before the finance committee yesterday and, notwithstanding the wishes and views of members of the committee, they retorted with standard banking language, obfuscated their responsibility to the taxpayer and mortgage holders and refused to accept that they were rebuilding their balance sheets on the backs of the 70,000 mortgage holders that they have on their books with a variable interest rate.

Today it is reported that all the Governor of the Central Bank can say to the banks is that it is advisable to reduce the variable rates to head off any political response on the issue. That is a rather weak response from the Governor, who is somebody I respect. It is not the full extent to which the matter should be addressed.

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