Permanent TSB passes on rate cut
Permanent TSB has announced it is to cut its Standard Variable Rate (SVR) variable mortgages rates by 0.35 per cent which is slightly more than the quarter point cut announced by the European Central Bank (ECB) yesterday.
The reduction will see the bank's standard variable rate for home owners fall to 4.34 per cent from its current rate of 4.69 per cent. The cut will reduce repayments by €40 per month for a customer with a 25-year mortgage of €200,000. The reduction will come into effect from Monday July 30th next.
It is the second rate reduction the bank has announced in the last 10 weeks. In May it rolled out a rate reduction for residential mortgage customers of 0.5 per cent after it came under intense pressure for being the most expensive of the main lenders doing business in the Republic..
All told Permanent TSB's double rate reduction has lowered the cost of an SVR mortgages by 0.85 per cent and will save customers of the bank with a €200,000 mortgage close to €1,000 a year.
Announcing the move the bank's new chief executive Jeremy Masding said it reflected its objective of bringing its variable mortgage rates closer into line with competitors; "The new Permanent TSB bank has to be both financially strong and strongly competitive for customers. Bringing our rates closer into line with the market is one part of that process," he said.
So far only Permanent TSB and Ulster Bank have confirmed that they will lower their variable rates in the wake of the ECB move. All the other mortgage lenders in the State have said they are keeping their rates under review with the exception of AIB which said yesterday that it would not be lowering its rates.
It pointed out that despite its failure to pass on the cut, it is still has the cheapest rates on the Irish market.
The ECB cut interest rates by a quarter of a percentage point to 0.75 per cent, a new record low. It will also reduce repayments for thousands of Irish people with tracker mortgages, which are tied to the central bank's rates.
As a result of the move - the third such rate reduction in nine months - a person with a €300,000 tracker mortgage will now pay about €135 a month less than they were paying this time last year which will amount to a total annual saving of more than €1,600.
The Irish Small and Medium Enterprises Association (ISME) has demanded that the Government to take "the strongest action possible, including sanctions, on banks that refuse to pass on the reduction to their small business customers and consumers".
In the wake of the ECB announcement, its chief executive Mark Fielding said the rate cut will be "seen as an opportunity by the greedy bailed-out bankers to maintain the benefit at the expense of their customers. The banks should be forced through stiff sanctions, including penalties, to do the right thing and pass the rate cut on to their hard pressed customers".