The Government are considering plans to impose higher levies and taxes on banks if they refuse to cut variable mortgage rates, Tánaiste Joan Burton has warned.
Health Minister Leo Varadkar also strongly hinted the Government will have to act if the banks do not move to ease rates for an estimated 300,000 borrowers, whose repayments are among the highest in the Eurozone.
Labour leader Burton went further at the weekend though and said the Government would also examine the option of increased taxes and levies if the banks refused to move on variable rates.
“That is a possibility,” Ms Burton said when asked whether the Government may increase the levy if the banks do not cut rates.
Mr Varadkar accused banks of treating people on variable-rate mortgages “very badly” and “shabbily”.
He was speaking after it was reported the Coalition has warned the banks to reduce their variable rates or face levy hikes. If banks refuse to cut variable rates, the Government could hit them with “severe” hikes in levies.
However, Mr Varadkar insisted the Government was not going to interfere in the commercial decisions of banks, saying: “It would be a mistake to do that.” He also said there “hasn’t been an official decision or anything like that on the bank levy that I’ve been party to”.
Lenders have been reluctant to pass on European Central Bank rate cuts to their mortgage customers, with most banks only returning to profitability last year following the 2008 financial crisis.
The Central Bank’s latest figures showed the average interest rate on a new, variable mortgage was 3.26pc at the end of January. That is compared with the equivalent eurozone rate of 2.3pc.