THERE HAS BEEN too much “guff” in relation to Irish banks not increasing interest rates for savers to the same degree as for mortgage holders, according to Higher Education Minister Simon Harris.
His comments come after he said Irish banks have been “complete and utter laggards” when it comes to passing on increases in interest rates to savers.
Several hikes in interest rates have been imposed in order to help tame inflation, leading to higher borrowing costs for mortgage holders.
According to the latest Consumer Prices Index, mortgage interest repayments were up 49.5% in the year to July.
However, the Banking & Payments Federation has said that banks have “been slow” in passing on the full effect of ECB interest rate increases to deposit rates.
“Many savers in this country are getting 0% interest while the bank is getting 3.75% from the Central Bank. Now I think there’s far too many strawman arguments and guff going on here in recent days that needs to be cut through,” Harris told reporters today.
“Savers and mortgage holders are not always different people. There’s many people, including many people that I represent in Dail Eireann, who might try to put away a few bob for a rainy day for their family and, in fact, that might be the few bob that they try to dip into if they see an increased bill.
“So the saver and the mortgage holder could well be the same person in many cases, and there’s a third leg of the stool here as well: it’s not just savers and mortgage holders, it is profit.
“And profit is a good thing by the way, but profit is generally something earned on the basis of ingenuity, of hard work, of innovation, not something that you manage to exploit arising from an inflationary crisis.”
Harris added: “People are really struggling… and I do think it galls them when they see a lack of fairness… it’s not the we’re just a little bit behind in Ireland, we’re well behind what is the European norm.”
Oireachtas finance committee chair John McGuinness said over the weekend that banks would appear at the committee in early September to answer questions about interest rates, as would the Banking and Payments Federation of Ireland.
He said banks who fail to pass on increased interest rates to deposit holders should be penalised.
Minister for Finance Michael McGrath also confirmed that the bank levy would be extended into 2024.
Sinn Féin has also been critical of the banks for their failure to increases rates for savers.
It has also called for mortgage interest relief to form part of this year’s budget, as well as highlighting how households who, without their consent, have had their mortgages sold off to vulture funds are now facing up to 10% interest rates.
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