Noonan to meet banks in new year to discuss variable mortgage rates

Minister for Finance Michael Noonan will meet the banks early in the new year "if we are all around" after the general election to again discuss standard variable mortgage interest rates.

The Minister told Fianna Fáil finance spokesman Michael McGrath the “inertia” of mortgage holders was preventing them getting much better value.

He said he wanted to see how the market operated and “if competition will kick in” because “there are dozens of interest rates being offered now”.

He said: “Higher-than-warranted mortgage interest rates will encourage new entrants to the Irish market over the long term.”

Mr McGrath said the Minister appeared to have “made up his mind that the banks have gone far enough to satisfy him” about the level of interest rates they were charging following his two rounds of meetings since May.

The Cork South Central TD pointed to the high rate of interest being charged on up to 300,000 mortgage holders, upwards of 2 per cent more than homeowners across the EU.

He said the new options introduced by banks were very selective and of benefit mostly to new customers. “Many existing customers continue to be discriminated against.”

Mr Noonan said “the reality is that the majority [of banks] have put options in place to allow borrowers reduce their monthly payments”.

He was puzzled more people were not switching. “There is demonstrably an amount of money to be saved if people change, yet there appears to be an inertia in the system.”

Independent TD John Halligan said changing "should not have to be an option". Legislation should be brought in to force the banks to reduce their interest rates.