Image via WikipediaBorrowers deserve full benefit of lower interest rate
Fine Gael Enterprise Spokesman Leo Varadkar TD has called for the European Central Bank’s (ECB) 0.5% interest rate cut to be passed on to homeowners in full, and said banks will be saving €1.3 million every day that they fail to pass on the lower rate.
“This co-ordinated interest rate cut from the ECB, the US Federal Reserve and the Bank of England is very welcome and will provide much-needed relief to hard-pressed homeowners. However, it is essential that the new rate is passed on to homeowners as soon as possible, as homeowners with an average €250,000 variable rate mortgage would benefit by €105 a month.
“Banks will be saving €1.3 million for every day they fail to pass on the lower rate. Current mortgage debt stands at €121 billion, with around 80% of these mortgages on variable rates, representing some €96 billion.
“The 0.5% interest rate cut would therefore represent a saving to homeowners of €482 million a year, or €1.3 million a day, if passed on in full to homeowners. A homeowner with an average mortgage of €250,000 would therefore see their monthly payment reduced by €105 if the new rate is passed on. However, if the banks engage in their traditional delaying tactics and fail to pass on the lower rate, the banks will be the only ones to benefit.
“With increasing job uncertainty, growing unemployment, and rising house repossessions, banks must not be allowed to engage in their traditional tactics of maintaining higher interest rates. Furthermore, the rate cut must be passed on in full.
“I am very glad that the ECB has realised that preventing all of Europe from sliding into recession is just as important as controlling inflation. This co-ordinated approach is the first example of a genuine international response to the international financial crisis which could never have been solved through unilateral action.”