BANKS ARE TREATING people on variable rate mortgages “very badly” and “shabbily”, Minister Leo Varadkar has said.

He made the comments on RTÉ’s The Week in Politics today, when asked about a report in the Sunday Independent which says that the coalition has warned banks to reduce their variable rates or face levy hikes.

Varadkar said the Government is not going to interfere in the commercial decisions of banks, saying “it would be a mistake to do that”.

Despite the report today, he said that there “hasn’t been an official decision or anything like that on the bank levy that I’ve been party to”.

He said that in meetings between the Government and the banking sector, the government has made the point “very strongly”: “that people on variable rates are being treated very badly and shabbily by banks, particularly by banks in profit”.

The Sunday Independent reports that if banks refuse to cut variable rates (which affect 300,00 customers nationwide) then the government could hit them with “severe” levy hikes.

The Central Bank’s latest figures showed the average interest rate on a new, variable mortgage was 3.26% at the end of January.

That’s compared to the equivalent eurozone rate of 2.3%.

Read: Permanent TSB won’t cut rates on mortgages – it wants to boost profits from them instead>

Read: Our banks are making homeowners ‘pay way over the odds’>