Radical Action Needed to Prevent Another Decade of Mortgage Rip-Offs

10 February 2021
  • Central Bank figures show that interest rate rip-off for households and businesses continues unabated
  • Caps on mortgage interest rates now required
  • Public and community banking model needed to kick-start Covid-19 recovery.


Labour finance spokesperson Ged Nash has said that today’s figures released by the Central Bank figures shows that the interest rate rip-off goes on, with Ireland now having the second highest mortgage interest rates in the EU – more than double the weighted average.

The Louth and East Meath TD said:

“In real terms this can stack up to an extra €80,000 over the lifetime of an average €300,000 mortgage. So not only are homeowners being fleeced by developers when it comes to inflated house prices, they are then being hammered by excessive interest rates from banks.

“Caps on mortgage interest rates must now come into serious consideration as far too many people are struggling with the effects of the pandemic yet are still paying mortgage interest rates in excess of 3.5%.

“The reality here is that banks can borrow at 0% or less from the ECB, so there is absolutely no justification for sky-high interest rates.

“Likewise, today’s report reveals high interest rates and a tightening of credit lines on SME loans compared to the EU average. This comes at a time when our main street businesses are struggling for liquidity and cashflow.

“Last November the Central Bank’s Financial Stability Review warned ‘the downturn will be worse if the financial system were to restrict the supply of credit required to support households and firms during the recovery’. Yet this now seems to be playing out with a massive drop of 28% in lending to businesses.

“Now more than ever we need to revisit the German style  ‘Sparkasse’ model of small, community banks lending to personal customers and small businesses, and to consider turning AIB, which is currently 71% state owned, into a full public bank.

“With a decision on the future of Ulster Bank imminent, there is a real risk that a further lack of competition in the Irish banking sector will see interest rates charged by dominant banks rise even further.

“The evidence from the IMF and others is clear, that public banks lend more and more cheaply than private banks. The State must now step-in if we are to kick-start a real recovery from Covid-19, and a public banking model must be a key pillar of the forthcoming National Economic Plan.”

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