- Taoiseach to consider legislation forcing banks to do so
The ECB just last Friday reduced interest rates by ¼ % but already too many of the banks are resisting passing this reduction onto hundreds of thousands of hard pressed customers. So far Permanent TSB, KBC, Irish Nationwide, Bank of Scotland (Halifax) and EBS (just yesterday 8th November) indicated that they will reduce their rates in line with the ECB reduction; the others have not. The two dominant players in the mortgage market – AIB and Bank of Ireland, have not yet indicated what they will do. These banks are covered by the bank guarantee scheme; the tax payer has bailed them out. Given the vast amounts that we have pumped into them, it is simply not acceptable for them to hesitate, even for a second, about not passing on this rate reduction.
There are 55,000 people (or 7% of total mortgage holders) in arrears of 90 days or more. Unfortunately this number is up by almost 15,000 on September of last year. This is their money and they need this saving. For Bank of Ireland and AIB to contemplate pocketing money, that can help stop further families from falling into arrears, is morally unjustifiable and unacceptable to the Government. I was delighted to hear the Taoiseach over the weekend say that he is considering introducing new legislation if lenders failed to pass on rate reductions, as the Central Bank currently does not have the power to do so. However legislation takes time to go through the Oireachtas, and so Government officials are meeting AIB and Bank of Ireland this afternoon to discuss their unwarranted withholding of the interest rate cut. I will keep you informed of any developments.
For people struggling to replay their mortgage, early engagement is vital and ignoring the problem won’t make it go away. I would advise people to contact the Money Advice and Budgeting Services (MABS). They are a free, independent & confidential debt advice and money management service with over 60 offices nationwide. MABS is highly experienced in dealing with exactly this sort of difficult financial situation and can in some cases negotiate more manageable repayments on your behalf. The key point is that there are options available to people and everyone must play their part, including the lenders.