More banks agree to pass on full interest rate cut

Mortgage borrowers with Bank of Ireland, Ulster Bank, First Active, Permanent TSB, National Irish Bank and EBS will receive the full 0.5 per cent cut in interest rates introduced by central banks yesterday.

This follows on from commitments made yesterday by AIB and Bank of Scotland (Ireland), which includes its retail banking arm Halifax, to cut their rates.

Bank of Scotland (Ireland); Ulster Bank and First Active said the changed rates will apply from November 1st. Bank of Ireland and subsidiary ICS Building Society said the new rates would come into force on November 5th while AIB and Permanent TSB have yet to confirm a date. EBS said changes to its rates "would be reflected in members’ November mortgage repayments".

National Irish Bank will cut rates for tracker mortgages from October 15th, while customers on its standard variable rate will see their repayments fall from October 27th.

Earlier today the Minister for Health Mary Harney told the Dáil she expected all banks to pass on the rate cut in full.

"Liquidity is important for banks and so too is customers," she said during the Order of Business. "There is good competition in the banking sector for depositors and mortgage holders and I would expect that the reduction is passed on to the customers."

The interest rate cut will result in mortgage loan repayments dropping by between €50 and €150 a month. For example, holders of a €200,000 mortgage over 20 years will see their repayments fall €56 per month to €1,325.

A property-owner with a €500,000 mortgage over a 30 year term will see payments drop €156 per month to €2,885 - based on a tracker mortgage with a margin of 1.3 percentage points over the ECB rate.

Borrowers who have tracker mortgages will see their repayments fall automatically in line with the European Central Bank (ECB) rate cut of half a percentage point to 3.75 per cent, which becomes effective from next Wednesday.

Mortgage borrowers on fixed-rate mortgages will not benefit from the rate cut.

Yesterday Bank of Ireland and ICS Building Society withdrew tracker mortgages for new customers due to funding costs.

The ECB cut interest rates yesterday as part of a co-ordinated move with the US Federal Reserve and the Bank of England to help ease the turmoil in the banking sector and to spur economic growth.