Banks pressed by finance committee members to hold off on rate hikes

Executives from the Republic’s three continuing banks came under pressure from TDs and senators on Wednesday to hold off on rate hikes, as the Oireachtas finance committee resumed business following the summer recess amid growing concerns about soaring living costs.

AIB chief executive Colin Hunt said that his bank will consider “over the course of the next number of weeks” its response to the latest increase in the European Central Bank’s (ECB) official interest rates on its own variable-rate and new fixed-rate mortgage pricing.

It would be “inappropriate” for the bank to give notice in advance of any decision, he said, in a clear nod to how price signalling, which would give competitors advance notice of moves, is illegal.

“People are hurting very badly,” Mick Barry, People Before Profit TD, said at the AIB portion of the committee meeting of the cost-of-living crisis, amid surging inflation, as he called on banks not to pass on ECB rate hikes. “People are options of heating or eating this winter. Some people, I believe, will not be able to heat their homes properly.”

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Sinn Féin TD Pearse Doherty also called on the banks to “absorb” the ECB rate increases. The Frankfurt-based institution has raised its key rates by 1.25 percentage points over the past eight weeks. Its president, Christine Lagarde, told reporters last week it would take between two and five further hikes before official rates were high enough to bring inflation under control.

None of the three banks have yet moved their variable or new fixed-rate mortgage prices in response to the European moves to date. However, some of the nonbank lenders have increase the cost of certain products in recent months, as their own market funding costs have been rising.

Mr Hunt said that his bank is “deeply conscious” of the level of uncertainty in the economy at the moment as it considers its rates.

Bank of Ireland interim chief executive Gavin Kelly declined to comment on the prospect of the lender raising rates “because we haven’t made any decisions in relation to further changes to those rates”.

“We constantly keep our mortgage rates on the review,” he told the committee.

Permanent TSB chief executive Eamonn Crowley said his bank “hasn’t moved” on the basis of the ECB hiking its rates by 1.25 percentage points.