Nash Slams Rising Interest Rates for Mortgages and Business
11 September 2020
Spokesperson on Finance, Public Expenditure and Reform
Responding to the release of retail interest rates for July by the Central Bank, the Labour Spokesperson for Finance Ged Nash has slammed the continuing rise in interest rates on loans for new homeowners and businesses at a time when banks can borrow at near 0% or below
The Labour Louth & East Meath TD has called on the Minister for Finance to ensure that profitable Irish banks, particularly those in which the State owns a significant share, pass on lower interest rates to ordinary families and local businesses in line with Eurozone levels.
Deputy Nash said:
“It seems inexplicable that at a time of negative or near zero European Central Bank (ECB) interest rates, Irish banks are continuing to charge businesses and new homeowners double the EU average for their loans.
"The new average interest rate for loans stood at 2.82% in July - up 3 points – and is now more than double the Eurozone average of 1.35%.
“Likewise, the rate for small and medium business loans now stands at nearly 5% (4.95%), over three percentage points higher than equivalent interest rates in the EU (1.91%).
“We have interest rates that are akin to giving a drowning person an anchor instead of a lifebuoy at a time when many small businesses are desperately struggling to access cash to survive”.
Deputy Nash continued:
“At the beginning of the crisis we heard a lot of talk of solidarity from the banking sector.
"But instead we have seen charges on payment breaks, staff layoffs and branch closures at the time of an unprecedented economic crisis and a raft of fee increases being mooted for customers – all in addition to a continuing increase in interest rates.
"This is despite record banking profits in recent years, with AIB reporting a profit of more than €1.4 billion and Bank of Ireland announcing underlying profits of €935 million in 2019.
“Let’s not forget these are the same banks which were bailed out and effectively nationalised by the Irish taxpayer during the last crisis - with the State owning 71% of AIB and 14% of Bank of Ireland.
“Yet these banks continue to treat their customers, staff and businesses with contempt.
“The Minister for Finance, as the representative of the Irish taxpayers, needs to show whose side he is on and urgently demand lower rates are passed on.
“If he is unable to do so under the current terms of the Relationship Framework Agreements with State-owned banks, then perhaps now is the time to revisit these agreements to protect the interest of the Irish taxpayer.
“In addition, the forthcoming National Economic Plan promised by the Government must strongly consider a new Community Banking and State Investment Bank model to ensure that ordinary workers and main street businesses can finally access loans at levels parable to EU rates.”