Minister for Finance Michael Noonan confirmed this week that he had secured agreement from the six main banks that they would begin reducing their variable rates from July onwards.
However, Bank of Ireland has now stated that it will not be complying with the Goverment’s request.
The ECB’s lending rate currently stands at a record low, but variable mortgage holders in Ireland are still paying way above the European average rate in Europe.
Bank of Ireland has announced that instead of cutting rates, it will encourage its customers to change to fixed rate deals.
The Minister for Finance has said that if banks do not cut their variable rates, they could face a levy in the budget.