Major blow as Irish savers miss out on MILLIONS every month over banks’ rate switch failure

IRISH savers are being stiffed by more than €120million a month as banks fail to increase deposit interest rates in line with hikes from the European Central Banks, experts have revealed.

In the past 12 months, the ECB has upped its key deposit rate from zero to 3.25 per cent, however, deposit interest rates haven’t moved accordingly here.

According to chief executive of online mortgage firm onlineapplication.com, Karl Deeter, there is roughly €150billion in deposits with the State’s banks.

So for every one per cent in interest that is not passed on to savers, around €1.5billion is lost.

At present, Deeter claims deposit rates are half or three-quarters of one per cent when they should be at least 1.5 or two per cent.

He added: “Spain, France and many other countries in the EU are offering much better rates than Ireland and the idea that Irish banks are just so brutally regulated or so brutally inefficient that they can’t offer higher deposit rates simply isn’t true.”

Daragh Cassidy from Bonkers.ie said that while Irish banks’ unwillingness to pass on ECB hikes has benefitted mortgage holders, savers have been handed the short straw.

According to the Central Bank, Ireland’s banks offer the third lowest mortgage rates in Europe.

Speaking to us, Daragh said: “Banks in Ireland comparatively have been keeping their mortgage rates quite low compared to the EU standard for the past few months.

“But keeping mortgage rates as low as possible has come at the expense of having some of the lowest deposit rates.

“So in that way, savers are actually subsidising those looking for a mortgage.

“But in the banks’ eyes, favouring mortgage holders is much easier than savers, because supporting the first time buyer looks much better than supporting someone with €100k in the bank.”

He added: “For example in AIB the maximum deposit rate they are offering is around one per cent, their fixed rates are sitting at over 4.5 per cent. That’s quite a significant jump.

“They’re taking in lots of money from savers for a very low rate and are loaning it out at a higher rate, it’s that simple.

“And for AIB specifically, when you look at their recent trading updates they look very very positive, and you can see why.”

BANK WOES

In a statement sent to the Irish Sun, an AIB spokesperson said the bank has “insulated the vast majority” of deposit customers during a “sustained period of European negative interest rates” in the past eight years.

They added: “While the European Central Bank has increased rates by 3.75 percent since last summer, we have not passed on all those rate increases to borrowers.

“In light of the evolving interest rate environment, we constantly keep all our rates under review.”

A Bank of Ireland spokesperson said the company has been “very measured in the application of mortgage rate increases over the past year”.

The bank has also recently announced a new savings product, offering an interest rate of 1.5 per cent

They added: “Our objective is to look at our entire customer base, and consider both loan affordability and interest paid to deposit holders, to find the right balance.

“We will continue to take a measured approach into the future.”