Families feel the pinch as banks slash rates for new customers only

Irish families will pay up to €2,000 more than first-time buyers for their mortgages as the banks slash interest rates for new customers only.

Lower rates for new customers have been introduced at Bank of Ireland and Permanent TSB to take advantage of a recovering property market, yet both banks have refused to reduce variable home loan rates for their existing customers, meaning many families in negative equity with no chance of switching have no choice but to pay while new borrowers benefit from the mortgage price war. Last month 146,000 customers benefited from a rates cut at AIB but existing Irish borrowers still pay the highest rate of interest in the Eurozone. Ireland’s three-tier mortgage market means mortgage holders on a variable rate can pay a whopping four times more in interest than those with tracker mortgages. Fianna Fail Finance spokesman Michael McGrath described the reductions for new customers as deeply unfair.