Senior Cabinet members are said to be ‘furious’ at the banks’ stance regarding variable mortgage rates, in particular their refusal to pass on historic low interest rates on to homeowners.
New punitive measures for lenders being considered include hiking the current bank levy of €150m. If this did come to pass, it might enable the Government to afford USC cuts, according to a senior source within the Cabinet.
The source said “mortgages, arrears and the variable rate are absolutely occupying the attention of the Economic Management Council and have been for some weeks now. This is the chief focus of Cabinet discussions.”
The Taoiseach received some flak in the Dáil last week, when he was accused of “abandoning” the 300,000 families on variable mortgages.
Mr Kenny claimed that he did not have the power to “fix rates”, but did say the Government is “not happy with the banks”.
There are also plans to apply more pressure on lenders over their attitude on arrangements with homeowners in arrears, after it emerged that banks are liberally, and often unfairly, using their power of veto over proposed repayment deals, even when it may be costing them more money to do so.