Fianna Fáil Spokesperson on Finance Michael McGrath claims banks are "ripping off" variable rate customers.

Mr McGrath said the fact that the average interest rate on new mortgages in the euro area is 2.09% compared to a rate of over 4% in Ireland underlines the extent to which banks are "ripping off" their variable rate customers.

However, the Chief Executive Officer of AIB has given a strong indication that the bank could reduce its standard variable mortgage rate within the next couple of months.

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At an Oireachtas Finance Committee Mr David Duffy said if present market trends continue the bank may make a significant rate cut.

Deputy McGrath welcomed the news. He said: "The comments by AIB CEO David Duffy today are welcome and must be quickly backed up by a significant variable rate cut from the bank. AIB's cost of funds at the end of last year was 1.57% and has almost certainly fallen further since then and the bank is earning massive margins on variable mortgages. Against that backdrop, variable rates of over 4% are exorbitant and unacceptable."

(CD/MH)