Cost of living pressures have been increased by massive increases in interest rates.
Tens of thousands of people are being pushed to their limit by high mortgage repayments. The average rate for new mortgage lending is now 4.24%, the second-highest rate since 2017 and this is the 7th highest rate in the Euro area. Irish borrowers are paying far above the Euro-area average of 3.81% and way above the 2% charged in Malta.
The 95,000 mortgage holders with ‘non-banks’ or vulture funds are suffering the worst rip-off, paying 4.52% on average compared to 3.6% for customers of the main banks. In many cases, they are forced to pay extortionate rates of 7% and 8%. In addition, thousands of mortgage holders on expiring fixed rates this year will face jumps in interest rates from 2-3% at present to 4-5%.
Two years of rising interest rates are already leading to a jump in early mortgage arrears. According to the Central Bank, this has been ‘driven primarily by the non-banks’ i.e. vulture funds.
The three main banks – AIB, Bank of Ireland and PTSB made record profits of more than €4 billion last year, mainly from high interest rates on their deposits with the ECB. Absorbing the cost of capping mortgage interest rates would cost less than half that. Other EU countries, including Belgium, France and Italy, already cap interest rates. There is no reason why the government cannot do the same and cap mortgage interest rates to stop the rip-off of hard-pressed households.
To put pressure on the Government to act, People Before Profit are pressing forward with the Mortgage Interest Rates Cap Bill 2023 in the Dáil this afternoon, Thursday, 20th June. If passed into law, it would force the banks and non-banks/vulture funds to cap mortgage interest rates at 3%, and to absorb any costs from their massive profits and thereby save mortgage holders thousands of euro a year.