Slash mortgage rates like the UK

Their lowest rate is 1.1pc ...cheapest here is 3.7pc

A MORTGAGE price war has broken out in Britain – renewing calls f or the banks here to be forced to cut their rates.

Last week the Co- operative Bank there launched a two-year fixed rate mortgage with an interest rate of 1.09 per cent – the cheapest fixed-rate mortgage ever to go on sale in the British market.

The Yorkshire Building Society is offering a two-year 1.18 per cent rate and HSBC has a five-year rate of 1.99 per cent.

As the price war intensifies in Britain, Barclays has entered the fray and is matching HSBC’s headline rate.

However, across the Irish Sea, the offers are very different, with the best two-year fixed-rate deal being 3.7 per cent from Permanent TSB and the mortgagestore.ie.

The best three-year rate comes from Ulster Bank with 3.65 per cent – but this is only available if buyers have 40 per cent of the home price up front. The best fiveyear rate can be obtained from Ulster Bank at 3.7 per cent.

Monthly repayments f or a 30-year mortgage on a loan of € 300,000 come to € 1,381 per month. Such a mortgage, though, would only buy a modest family home in a Dublin suburb but would purchase a bigger one outside the capital and main cities.

If that same buyer could get a loan with the equivalent rate of 1.09 per cent that a British family can avail of, the monthly payment would be €977.33.

This is a difference of €403.52 a month, or €4,842.24 a year.

Within the last fortnight, Bank of Ireland and Ulster Bank have resisted public pressure to cut interest rates on standard variable rate mortgages, when asked to do so at Oireachtas committee hearings.

AIB has made two small reductions in the last six months – of 0.25 per cent each time.

Fianna Fáil finance spokesman Michael McGrath last night said urgent action was needed from Finance Minister Michael Noonan or Central Bank Governor Patrick Honohan.

Mr McGrath said some families were clearly struggling to make ends meet due to the burden of expensive mortgage repayments.

He said: ‘This is an example of a blatant rip-off and profiteering by the banks and it’s unacceptable considering what the Irish taxpayer has done for them in bailing them out and keeping them afloat through the recession.

‘ We keep hearing f rom the Government that they are taking action, that they are repairing the banking system, that they are acting in the interest of families and homeowners. Well, here is

‘It’s a blatant rip-off here’

clear evidence that they are not.’

Mr McGrath, TD f or Cork south-central, said the banks were now back in profit or were approaching profitability.

‘It’s time they gave something back to their customers, many of whom are struggling to pay the exorbitant rates they are being charged,’ he said.

‘Nobody in the Central Bank or in Government seems willing to act or intervene here and yet that is what is necessary because the banks clearly aren’t going to do it of their own accord.

‘Every month that passes we are seeing arrears grow and i t’s putting serious pressure on domestic family budgets. Some families can’t cope any more and urgent action is required.’

‘Putting pressure on families’