Funding costs for banks have fallen
1 per cent in the last 6 months.
Irish banks have been urged to reduce the variable rate on mortgages after a sharp fall in their own borrowing costs. For years now, lenders have cited the high cost of funds as the reason variable rates are almost more than double those of tracker rates.
In the last 6 months alone, borrowing costs for Irish banks have fallen about 1 per cent.
The difference in repayments is now more than €400 a month between what a family is typically paying on a variable mortgage compared with those on a tracker mortgage.
Chairman of the Consumers Association Michael Kilcoyne has asked the Department of Finance to put pressure on the domestic banks to cut their variable rates.
In Ireland, some 300,000 homeowners are on variable rates, while 375,000 are on tracker rates.
Kilcoyne is quoted as saying, “The Department of Finance should force the banks to pass on lower funding costs to consumers. The banks will still make the same profit margin and would lessen the pain for hard-pressed families”.
The Independent Advisors Federation also added that a cut in variable rates would be of great benefit to the nearly 96,000 residential mortgage holders who are three or more months in arrears.
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