Fixed rate mortgage holders must be helped
Issued : Saturday 28 March, 2009
Statement by Roisin Shortall TD
Minister of State, Department of Health with responsibility for Primary Care
Last night I spoke about the difficulties that those who have lost their jobs are experiencing in meeting mortgage repayments.
I outlined some urgent steps the Government needed to take to assist them and to prevent future poverty traps.
Today I want to address the part the banks could play in assisting those working families who are struggling to meet their mortgage repayments.
For mortgage holders on a tracker mortgage, the cost of interest on their monthly payment has declined significantly in the last 12 months - by 26%. This has helped somewhat to offset pay cuts, extra taxes, and extra levies. It has helped them to meet higher costs on items like groceries, insurance, childcare and GP fees.
But not everyone has been so lucky.
Mortgage holders on a fixed-rate mortgage have had to bear all these extra costs, cuts and charges too; yet their monthly mortgage bill has not reduced at all.
For most there is a very hefty penalty if they try to switch. One constituent told me his bank is charging him €14,000 to switch from his 12 year fixed rate mortgage.
It is time the banks played their part. The two main banks have just been backed by the tax-payer to the tune of €7 Billion, with very few strings attached. Others are benefiting from the bank guarantee. One bank is now even State-owned.
It should be possible for the banks to offer a once off penalty-free switch to a variable rate mortgage to existing customers or to at least reduce the penalty significantly.
No-one is asking for a free ride, just a bit of fair play.
Emergency financial support from the State can't be a one-way street. If taxpayer's are playing their part, then the banks must play theirs too.
