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Bank cutting mortgage repayments

Published 29/05/2015

Taoiseach Enda Kenny had criticised the bank
Taoiseach Enda Kenny had criticised the bank

Bank of Ireland is cutting mortgage repayments for some customers who take on a fixed rate.

But the bailed-out lender has again refused to slash variable rate home loans, despite Taoiseach Enda Kenny having condemned the failure as morally unacceptable.

While other banks have signalled their intention to pass on historically low interest rates to variable rate mortgage holders, both Bank of Ireland and Ulster Bank have repeatedly refused to do so.

Instead, Bank of Ireland is hoping to lock customers into fixed rate loans by cutting interest on them by between 0.1% and 0.3%.

The lender, which was rescued by taxpayers during the crash, has launched a charm offensive to persuade existing and new customers into the fixed rate mortgages, starting from 3.6%

Aine McCleary, head of mortgages of Bank of Ireland, said fixed rate mortgages made up less than one in 10 homeloans at the end of last year.

"However, in the first quarter of 2015 alone, approximately 50% of our new mortgage customers have chosen a fixed rate," she said.

Last month, the Taoiseach said it was not acceptable that bailed-out banks refuse to cut mortgage repayments for hundreds of thousands of Irish homeowners.

There are around 300,000 homeowners in Ireland on standard variable rate mortgages.

They are being forced to pay around double the interest of similar home loans across Europe.

The higher rate heaps several thousand euro more onto annual repayments compared to the EU average.

"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," said Mr Kenny at the time.

Tanaiste Joan Burton responded that it may have ''slipped their mind'' that taxpayers had re-capitalised the lenders during the economic collapse in recent years.

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