AIB and EBS banks have confirmed they are to reduce their variable interest rates.

Fianna Fáil Spokesperson on Finance Michael McGrath welcomed the announcement and said it will benefit both the owner and occupier and buy-to-let mortgage holders.

Deputy McGrath said: "Over the past month, since Fianna Fáil put it firmly on the political agenda, a head of steam has built up on the issue of excessive standard variable rates being charged to 300,000 variable rate mortgage customers throughout the country. AIB now needs to back up today's announcement by aggressively seeking to win over mortgage customers from other banks. This is the kind of competition dynamic that we need to see develop in the market.

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"The standard variable mortgage rates being charged by banks in Ireland are completely unjustifiable. With the falling cost of funds and rapidly rising net interest margins, the banks are extracting more and more profits from variable rate customers. The attitude of Bank of Ireland and Ulster Bank this week is reprehensible in light of the compelling evidence that customers on variable rates are being simply ripped off. Both Minister Michael Noonan and the Central Bank need to deliver a strong message to the banks that the rates being charged are not unacceptable in light of the improved funding environment in which they operate."

(CD/MH)