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Banks should cut 'above average' rates

Tuesday, August 12 10:32:29

Irish home loan borrowers are paying above the odds and lenders should cut their rates, especially for first time buyers.

That's according to the Irish Brokers Association responding to new figures from the Central Bank which reveal that new mortgage rates in Ireland are higher than the average in the Eurozone.

The broker representative body is calling on lenders "not to abuse their current position" and to reduce rates for First Time Buyers (FTBs) and existing mortgage holders.

According to Ciaran Phelan, CEO of the Irish Brokers Association, "Everyone knows there is a tranche of FTBs waiting to enter the Irish property market - and no-one is more aware of this than the banks. The lending restrictions of recent years have led to a glut of people who are just itching to get on the property ladder and because lending still remains tight many of these are at the mercy of banks - and of their rates. Mortgage lending in Ireland is still well below what would be considered a normal market of between E8 and E10 billion."

He pointed out that the ECB main rate has never been lower.

"So why then have new figures from the Central Bank revealed that the interest rates on new loan agreements to households for house purchase, with either a floating rate or initial rate fixation of up to one year are some 51 basis points higher than the equivalent euro area rate?" said Mr Phelan.

"Our message is quite simple - we want the banks to reduce their rates to promote a fairer and more competitive market for those looking for new mortgages. Lower rates mean more affordable repayments and greater spending power in the rest of the economy. If the past has thought us anything is that overly extended Irish mortgage holders will have detrimental impact on the economy as a whole and financial institutions have a responsibility to play their part to ensure that this does not happen again," he added.

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