Thousands of homeowners are paying massively over the odds for their mortgages because the banks have failed to tell them of better deals on offer.

In some instances, people with variable rate mortgages are paying as much as €3,000 a year extra on a €300,000 loan.

But they could slash their repayments by switching to the alternative and cheaper tracker mortgages where the banks have no scope for hiking up rates.

It emerged last night that the banks are raking in a massive €1bn windfall a year by not telling their customers of the cheaper options available.

The rip-off particularly affects loyal customers who have had their mortgages for years.

The banks have been steadily raising their variable rates to make up for losses incurred during the credit crunch.

Anything between half and three-quarters of existing mortgages are standard variable rate mortgages, making up a huge chunk of the €384bn Irish mortgage market.

Banks have blamed the credit crunch for forcing them to impose large increases in variable mortgage rates, even though these home loans have always been poor value compared with tracker mortgages.

But in the last few weeks the rates charged for standard variable mortgages have shot up by up to 0.60pc, with banks blaming the credit crunch that began at the end of last summer.

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