Noonan 'encouraging' banks to cut rates
The Finance Minister, Michael Noonan, has said he has no power to force banks into cutting interest rates for variable rate mortgage holders.
Banks are deciding what to do after the European Central Bank cut the interest rate by 0.25% yesterday.
Ulster Bank is to pass it on while AIB has said it won't, Permanent TSB has just confirmed that it is cutting its standard variable rate by 0.35%.
The rate cut will benefit more than 80,000 customers and will come into effect from Monday, July 30.
Announcing the move, the new Chief Executive of the bank, Jeremy Masding, said that it reflected the bank’s objective of bringing its variable mortgage rates closer into line with competitors.
Mr Masding said" "The new permanent tsb bank has to be both financially strong and strongly competitive for customers. Bringing our rates closer into line with the market is one part of that process."
However, Mr Masding said that the bank was working on a detailed plan to return to profitability and in that regard mortgage rates had to be economically viable.
"The restoration of a healthy, competitive, viable banking system for Ireland must be grounded in prudent, responsible pricing structures across bank product lines. In the case of mortgages, we can’t divorce our mortgage rates from the cost of our funds and that remains relatively expensive."
Michael Noonan said it is not his role to tell banks what to do.
Mr Noonan said: "They have to make commercial decisions. We have been encouratging the banks to fly on their own again and make good commercial decisions.
"But they all have board of directors and on the boards of director, there are directors that were appointed by my predecessor Brian Lenihan as public interest directors and they should have an influence in these matters."
