At present, a Bank of Ireland split mortgage customer will pay tens of thousands of euro more than an AIB customer for example.
Deputy McGrath commented: "As far back as September 2011, the split mortgage model was identified as an important long term forbearance option in the Keane report. However, different banks are offering very different terms on their split mortgage offer. For example, AIB is not charging any interest on the warehoused portion of the mortgage whereas Bank of Ireland is charged full interest on it. Permanent TSB has charged 1% interest on the warehoused mortgage but is moving to a no interest policy.
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"The dramatic difference for the customer is best illustrated by way of an example: Let's take a distressed borrower with a mortgage of €200,000 who qualifies for a split mortgage with 50% of the mortgage being warehoused for a ten year period. With AIB, no interest is charged on the warehoused €100,000. However, under the Bank of Ireland model, the borrower will clock up an interest bill of almost €57,000 on the warehoused principal sum of €100,000 (assuming an interest rate of 4.5%). Under the Permanent TSB model, the borrower will clock up an interest bill of €10,500 on the warehoused mortgage.
"I have raised this issue on the floor of the Dáil and by parliamentary question on a number of occasions but to no avail. Both the government and the Central Bank have again taken a 'hands off' approach on this issue and have allowed the banks to set their own rules for the split mortgage solution."
(CD/JP)
