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“People with variable rate mortgages have no right to rate cuts”

I’m a big fan of the writings of Karl Deeter on the Irish Mortgage Brokers Blog. His coverage of the many differing finance topics of the day are very readable and most of the time make somewhat complex issues quite understandable.

This blog post, in light of other statements we’re hearing in the media recently, gave a very understandable reasoning for why banks aren’t (or shouldn’t) pass on recent interest rate reductions by the ECB:

People with variable rate mortgages have no right to rate cuts, variable rates are determined by individual banks and while AIB or BOI might be justifiably forced to pass on the rate cuts any bank that was not directly bailed out should be running a prudent business and if rate cuts are not on the table of prudent business then don’t do it.

This post was in response to statements from the Ulster Bank and First Active that they wouldn’t not be passing on the most recent interest rate cuts.

You should read the full post here as it goes on to expose the fallacy of the statement from both banks that they were doing this in favour of their savers rather than mortgage holders since their saving accounts don’t rate in the top 5 of any category.

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