Central Bank chief Patrick Honohan has issued a stern warning for banks to cut their variable mortgage rates, or they may face a Government-set cap on such rates.
Mr Honohan said: “Their boards and management need to recognise that charging spreads that excessively exploit the current weak competitive environment risks being counterproductive if they bring down upon themselves Government policy reactions.”
It is understood that Minister for Finance Michael Noonan is going to meet with the heads of the country’s six banks this week. He is expected to put pressure on the banks to cut their variable interest rates.
The vast majority of variable rates in Ireland are between 4.3% and 4.5%, which means that borrowers here end up paying about €350 a month more in interest than in other EU countries.