The financial results and trading statements of banks this week brings the issue of standard variable rate mortgages into sharp focus once again. This is a topic we have visited many times and, given the net increase margins and ‘continued expansion’ expected,  it is time reductions in interest rates were introduced on variable rate mortgages.

AIB confirmed that its net interest margin increased by 16 basis points to 2.08% ‘due to lower funding costs and stable asset yields. In other words, the bank continues to increase its profit margin from loans to customers. While AIB has reduced its variable rate on a number of occasions, I believe more progress is required in an environment where the bank is accessing funds at an all-time low cost.

Permanent TSB is clearly not in as strong a financial position as AIB,  but it is interesting to note the bank’s cost of funds is now as low as 0.77% and the core bank’s net interest margin has increased to 1.75%.

And yet, SVR mortgage customers continue to pay well over the odds on their mortgage in Ireland. Bank of Ireland has not moved at all on their standard variable rate and continue to charge ridiculous variable rates as high at 4.5% at a time when they are paying little or nothing for funds.

We are just coming out of one of the worst economic crises to hit Ireland, and it was the loyal mortgage holder who has seen the banks return to profit whilst many home-owners who could not pay, lost their home and joined the listings of the homeless.

Last May, a FF bill urging the Central Bank to be given the power to tackle the issue of excessive variable rates passed its second stage in the Dáil. We expect the Government to facilitate the taking of committee stage of this Bill in the autumn, so that its provisions can be enacted as quickly as possible.

It may not be soon enough for many Kildare families struggling to meet mortgage repayments but it is vital that we put pressure on the main banks to reduce their variable mortgage rates. The upsurge in profits for the banks should be reflected and passed on to its loyal customers who continued to meet re-payments in the midst of a national downturn in our economy  Give a little back, please!

FF spokesperson on Finance, Michael McGrath is seeking an assurance from Minister Michael Noonan that the Government will cooperate in moving this Bill through the various remaining stages in the interests of consumers who continue to be taken advantage of by their bank.