Robert Dowds
Question:47. Deputy Robert Dowds asked the Minister for Finance the extent to which Allied Irish Bank has increased the interest rate for its variable-rate mortgage holders. [43887/12]
View answerThursday, 11 October 2012
Questions (47)
Written answers
The Deputy will be aware that the Bank’s policy in relation to interest rates is a matter for the management and board of the institution. I have no role in the day-to-day commercial and operational decisions of the banks, which include these matters. These decisions are taken by the board and management of the institution. Notwithstanding the fact that the State is a significant shareholder in the institution, I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. However, AIB has informed me that it has announced two variable mortgage interest rate increases in 2012. The first increase to variable rates of 50bps was announced on 27 July 2012, and became effective from 4 September 2012. The second increase of an additional 50bps to variable rates was announced on 3 October 2012, and will become effective from 13 November 2012. In addition the Bank did not pass on an ECB rate decrease of 25bps in July 2012, though this must be seen in the context of the two 25bps ECB rate increases in April and July 2011 that AIB did not pass on to mortgage customers.
AIB has also informed me that even following the recent increases, it will still continue to have the lowest mortgage rate in the Irish market.