The Government has again been urged to address the “disproportionately poor savings” rates being offered to consumers in Ireland. With Central Bank data showing that up to €140 billion of Irish deposits still resides in overnight deposit accounts, accruing just 0.13 per cent in interest, Brokers Ireland highlighted poor rates offered to savers here.
Serious questions do need to be asked about “the inequality of this situation and what can be done to address it,” Brokers Ireland deputy chief executive Rachel McGovern said.
Retail banks have been criticised for failing to increase their deposit rates in line with European Central Bank (ECB) levels while reporting big annual profits.
Banks insist, however, that Irish savers have been slow to move their money out of low-yielding overnight deposit accounts and into accounts with higher interest rates.
“The Government should immediately introduce the recommendations of its own Funds Sector Review to enable consumers get a better return on their money and remove the massive tax disincentives that keep them defaulting to bank deposits with very poor outcomes,” Ms McGovern said.
The Central Bank data also showed the weighted average interest rate on new Irish mortgage agreements in January was 3.82 per cent, up 2 basis points month on month and 45 basis points lower in annual terms.
The equivalent euro area rate was 3.36 per cent.
“The rate in Ireland exceeded the euro area average by 46 basis points, an increase from 45 basis points in December, making it the fifth highest in the euro area,” the regulator said.
Ms McGovern also alluded to “the very high mortgage interest rates charged by credit servicing firms (operating in Ireland), ironically to those who can least afford to pay them”.
This comes in the wake of new research indicating about 7,000 Irish mortgage customers were paying interest rates of 8.5 per cent and above.
Ms McGovern noted the research highlighted a number of possible solutions, including: interest-free equity loans to clear the unsecured element of these loans; Government equity loans and a Government guarantee for active lenders to offer affected borrowers new mortgages.
Why wait, Ms McGovern suggested. “We believe most reasonable people would think it’s an injustice to persevere with a policy that sees those who can least afford it being saddled with the very highest rates of interest on their homes,” she said.
