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Kenny condemns banks over homeloans

Published 30/04/2015

Taoiseach Enda Kenny has attacked banks that were rescued by taxpayers during the crash
Taoiseach Enda Kenny has attacked banks that were rescued by taxpayers during the crash

Taoiseach Enda Kenny has condemned as morally unacceptable the refusal of bailed-out banks to cut mortgage repayments for hundreds of thousands of Irish homeowners.

After Bank of Ireland and Ulster Bank both signalled they had no intention of passing on historically low interest rates, Mr Kenny launched a strongly-worded attack on the lenders who were rescued by taxpayers during the crash.

"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," he said.

Irish homeowners on standard variable rate mortgages 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.

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

While State-owned AIB said it will consider a further cut to its mortgage rates in the coming weeks, both Bank of Ireland and Ulster Bank yesterday ruled out any reductions.

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.

But Fianna Fail's Sean Fleming, during Leaders Questions in the Dail, called on the Fine Gael/Labour coalition to acknowledge it was either powerless to take on the banks or was simply refusing to do so.

Mr Fleming said the "penal charges" imposed on homeowners - on average 2% more than other European mortgage holders - was costing Irish families a "whopping" 6,000 euro a year.

"Over the lifetime of a mortgage that is almost enough to pay for (another) house," he said.

Mr Fleming added that the majority of the 300,000 families on standard variable rate mortgages are paying them to State-owned banks under the control of the government.

Communications Minster Alex White, acting as leader for the government, said there were other factors than lending rates at play and that there was an "active review" ongoing into how interest rates are regulated.

The Central Bank is also "researching" why mortgage repayments have not fallen and would report back to the coalition in the coming weeks, he added.

Mr White said there was no statutory power to intervene to cut rates, but added Finance Minster Michael Noonan has suggested talks with all six main lenders about the issue.

Sinn Fein's Peadar Toibin said Fine Gael and Labour are a "hands off government" when it comes to the banks.

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