Banks refuse to pass on mortgage rate cut despite pressure

More State banks have defended the standard variable rates (SVR) they impose on some mortgage customers. They said that while rates are kept under review there are no imminent plans to lower them.

Permanent TSB claimed that its SVR of 4.5 per cent was "competitive in the current market" adding that it "broadly reflects the various cost inputs including the cost of funds which the bank raises from a variety of sources including the retail deposit market in Ireland and the international money markets".

When asked if there were any plans to reduce the rates in light of changing market conditions and pressure from Government, a spokesman would say no more than they “always monitor our rates and will continue to do so”.

KBC offers the same SVR as PTSB although mortgage customers can get a 0.2 per cent discount on both new and existing variable and fixed mortgage rates if they hold a KBC current account with the Bank.”

The bank would not be drawn on its plans other than to say its rates were kept on “under review”.

The average on a tracker mortgage is just over 1 per cent. The average variable rate across the euro zone, meanwhile, is 2.47 per cent. This means that someone with a €300,000 mortgage and an SVR mortgage with a leading Irish bank pays around €650 a month more than someone with a tracker.

The banks' apparent resistance to an immediate rate cut comes just 24 hours after both Ulster Bank and Bank of Ireland ruled out rate cuts for customers with SVR mortgages setting themselves on a collision course with the Government.

Earlier this week the Minister for Finance Michael Noonan said he planned to ask banks to cut the cost of variable mortgages and expects them to follow his recommendation.

This was followed by a call from Taoiseach Enda Kenny to cut their SVRs. “From any moral point of view, from any ethical point of view, when banks are now restructured and on their way to making profit again, it is just not acceptable that when they themselves can borrow at much cheaper rates that they continue to have higher rates applied to mortgage holders,” Mr Kenny said

Tánaiste Joan Burton echoed Mr Kenny’s sentiments and suggested it might have “slipped their minds” that people’s wages cuts funded the recovery of banks.

“Gratitude will only get you so far with the banks. I’ve never known bankers to be a particularly grateful sort of people,” she said.