Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

As an opening position, I accepted the argument made in this House and elsewhere that the standard variable rates being charged by banks and mortgage lenders in Ireland were higher than the market would seem to justify. I met the banks on the basis of that argument and asked them to reduce their standard variable rates or bring forward other products that would show a reduction and give people options. I do not want all of the banks to offer the same options. I want some competition in the market where different options are offered. Bank of Ireland decided that rather than reducing its standard variable rate, it would offer much better value options on fixed rates than it had heretofore. Now it is offering a substantially lower fixed rate of 3.6%. I am surprised at the inertia of customers in responding to the reductions of up to 1% that have been made available to them. I cannot fathom why there seems to be a reluctance to move from variable rates to fixed rates, even within the same bank. Many customers with quite small mortgages are happy to let them roll along. It seems that interest rate reductions of 0.5%, 0.75% or 1% do not represent a sufficient inducement to get them to do the paperwork to switch. The effect of the introduction of these options is interesting.

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