A Fine Gael TD has criticised banks for what she described as unacceptably high penalties set to release homeowners from their fixed rate mortgages.

Deirdre Clune said she has raised with the Financial Ombudsman's Office.

"Taking out a home loan is one of life biggest financial decisions," she said.

"In recent weeks I have been contacted by a number of people, especially young couples, who purchased homes in recent years and now find themselves trapped in a situation where they have high fixed rate mortgages and face large penalties to be released from these."

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She claimed the European Central Bank's interest rate cuts over the last several months have been of no benefit to fixed rate mortgage holders.

"In many cases these same young people have seen the value of their homes fall dramatically over the last 18 months and some even face negative equity," said the Clare TD.

Mortgage holders who opt for fixed rate mortgages make an agreement with their banks to pay a set rate for a set period.

Banks are legally entitled to charge the mortgage holders for seeking to break this agreement early but Ms Clune said they are not entitled to charge an unfair penalty.

"Mortgage holders who have sought to switch from a fixed rate mortgage to a variable fixed rate mortgage under, which they can benefit from the ECB interest rate cuts, and feel they have been charged an unfair fee from their banks can make a complaint to the Financial Ombudsman's Office," she said.

Mr Clune added: "The Financial Ombudsman’s office will investigate such complaints on a case by case basis."

(PR/JM)