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Ó Caoláin calls for ECB interest rate cut to be passed to mortgage holders immediately

9 October, 2008

Sinn Féin Dáil leader Caoimhghín Ó Caoláin TD and Finance Spokesperson Arthur Morgan TD met today with the Minister for Finance Brian Lenihan to discuss the terms and conditions to be attached to the deal with the Irish banks.

Deputy Ó Caoláin called on the Minister to ensure that banks and local authorities immediately pass on the full benefit of the cut in the European Central Bank interest rate to mortgage holders throughout the state.

Deputy Ó Caoláin also raised this issue in the Dáil this morning ahead of his meeting with the Minister.

He said, "Last week's state intervention in the financial sector has given the Minister for Finance significant powers over the Irish banks. It is essential that he uses those powers for the benefit of the state and ensures proper payback for the tax payers who have funded this insurance scheme.

"The cut in the European Central Bank interest rate, announced yesterday, has given the Minister his first opportunity to exercise his new found influence over the Irish banks. He needs to act swiftly and use this influence to demand that the banks pass the benefit of this cut directly on to mortgage holders immediately.

"The banks never waste time increasing mortgage repayment rates when the interest rate goes up and so should not waste any time cutting them when the rate is brought down.

"The Minister must also ensure that local authorities throughout the state also pass on the benefit of this interest rate cut directly to customers holding mortgages with them. Local authority house purchase borrowers are those on low incomes who could not access a mortgage through any of the commercial institutions. They are the people who most need to benefit from the decision of the ECB to drop the lending rate by a half of one percent. The Minister would have no credibility in calling on the commercial banks to drop their rates by the full decrease if, at the same time, he fails to ensure that the local authorities do the same." ENDS

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