HOMEOWNERS HOLDING mortgages with Permanent TSB will pay €90,000 more over the lifetime of a €250,000 loan than those with AIB, though both are State-owned banks, the Dáil has heard.
Fianna Fáil finance spokesman Michael McGrath accused the Government of taking a “hands-off approach” to Permanent TSB and not raising the issue with its management “despite the fact that we know that the rate being charged is contributing to a higher level of mortgage arrears in that bank”.
Minister of State for Finance Brian Hayes said neither the Central Bank nor the Department of Finance had a statutory function in relation to interest rate decisions made by individual lending institutions. One of the core elements of the EU-IMF bailout was that “the State-owned banks must be run on a commercial arm’s-length basis”.
This was “explicit from the troika’s very first involvement in the Irish programme. They have consistently stated that the pricing of loans and deposits had to be a commercial decisions for the banks.”
The Minister added, however, the Government “is committed to making the sustained effort that will be necessary to address the mortgage arrears problem”.
He said 65 per cent of PTSB mortgages were tracker mortgages, issued in the boom years and “very competitive”. Almost all others were on a variable rate with an average balance of under €90,000.
McGrath raised the issue of the variable rate being charged by the bank on up to 80,000 mortgage holders in order “to have a blatant anomaly in the mortgage market addressed”.
He introduced a Private Members’ motion dealing with “the unjustifiably” high standard variable interest rate charged by PTSB on its residential mortgages, the ongoing lack of credit for small and medium-sized enterprises and the escalating problem of mortgage arrears.
Claiming the Government was “effectively washing its hand of the argument”, he said a PTSB mortgage holder with a €250,000 loan was paying €300 more per month than someone on a similar AIB loan.
Dara Calleary (FF, Mayo) highlighted the difficulties of small and medium-sized businesses and said banks were sanctioning funding for businesses but then creating “ridiculous” hurdles, which were getting “bigger and greater and longer” and preventing firms drawing down their loans.
Fine Gael Limerick TD Patrick O’Donovan said “the banks are being kept open by the taxpayer and they would want to remember that”.
Galway Labour TD Colm Keaveney said there was a strong case for intervention by the State either through regulation or through “political pressure”.
