Noonan confirms banks will lower rates; warns them of Budget levy if they fail
Finance Minister Michael Noonan has confirmed banks have agreed to start lowering their variable mortgage interest rates from July.
Michael Noonan said banks who did not lower their rates could face a levy in the next Budget.
The Minister's announcement said the potential new mortgage products would include lower rates for existing and new customers.
He also said that he was stressing the need for banks to be more competitive with each other and warned that he would consider punishing banks with a levy in the next Budget if they did not cooperate to lower rates.
His statement came alongside the release of a report from the Central Bank which reported that the average interest rate on new mortgages in Ireland is 3.6%, compared to 2.5% in selected other European countries.
The report says banks must deal fairly with customers in terms of the rates they charge, pointing out the cuts to ECB rates had not been passed onto customers, partly because there was so little competition in the market.
It also notes that the banks are only beginning to return to profitability, in part because they need higher rates on variable mortgages to make up for their losses on trackers.
