TWO BANKS OPERATING in Ireland have said they will cut mortgage interest rates following the European Central Bank’s surprise decision to reduce the main interest rate by a quarter of a per cent yesterday.
KBC Bank Ireland said that tracker and variable rate mortgage customers will see a decrease of 0.25 per cent in their mortgage repayments from 1 December bringing the variable rate to 4.25 per cent for home loans customers.
Permanent TSB said it would also pass on the cut in its variable and tracker mortgages which will take effect from 21 November. The new variable rate will be 5.44 per cent.
AIB said its rates “are under constant review” and noted that it did not pass on the two previous increases to the main interest rate in April and July of this year. Its variable rate remains at 3.25 per cent.
Bank of Ireland said that “no decision has been taken yet” but that the interest rates were constantly under review. Its current variable rate ranges from 3.5 per cent to 3.85 per cent.
Ulster Bank said did not plan to adjust its standard rate of 4.95 per cent but was keeping it under “constant review.” Tracker mortgage customers will see a decrease of 0.25 per cent which will come into effect between 16 November and 1 December.
National Irish Bank, which is owned by the Danish bank Danske, said it would also not be adjusting its SVR but would pass on the cut to tracker mortgage customers.
The announcements follow new ECB president Mario Draghi’s surprise move to reduce the main interest rate to 1.25 per cent in his first meeting of the policy-making governing council yesterday.
The move was seen as a measure to calm markets following recent turmoil and an attempt to reduce eurozone inflation which has been above the target rate of 2 per cent for some time now.
The cut is expected to be followed by two further reductions in the main interest rate, which could amount to 0.5 per cent in total, by early next year.
The Irish Small and Medium Enterprise Association called on all lending institutions to pass on the rate reduction.
CEO Mark Fielding said: “It is essential that the reduction is passed on, especially as the banks have been consistently increasing the lending costs to unsuspecting customers over the last number of months.”
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