Permanent TSB's 0.5% variable rate cut to assist 74,500 mortgage holders
MORE THAN 70,000 Permanent TSB mortgage holders will see their monthly repayments fall after the bank announced it is cutting its standard variable rate by half a per cent.
The cut will save a homeowner with a €200,000 mortgage more than €600 a year. It comes into effect on May 14th and will see the monthly repayments of 74,500 residential mortgage holders fall.
The cut will see Permanent TSB’s variable rate fall from 5.19 per cent to 4.69 per cent, closer to those of other banks. However, the bank’s rate still remains more expensive than those of competitors. A half point cut takes an average of €27 off monthly payments on a €100,000 mortgage set over 20 years.
“We are setting out to create a more competitive bank that has a viable future in this market and that treats its customer fairly,” the bank’s chief executive, Jeremy Masding, said. “This move is an important statement of our intent,” he continued, adding the bank would keep its lending rates under regular review.
While the cut was welcomed, mortgage brokers said further rate cuts would be required if Permanent TSB was to fall into line with other State-owned banks.
The chief operations officer of the Professional Insurance Brokers’ Association, Rachel Doyle, said the move “should mark the beginning of interest rate cuts by all lenders on the basis that current lending rates are still too high, given market conditions”.
She said Permanent TSB rates remained some of the highest in the market, despite it having passed on European Central Bank (ECB) rate cuts in both November and December of last year. She said the bank should “also consider lowering its five-year fixed rate, which currently stands at 8.75 per cent”.
She noted ECB rates had not changed since last December “and there are no indications of any further cuts in the immediate future”. She said lenders “need to act independently and reduce excessive interest rates to alleviate the burden on those already struggling”. It was inequitable that variable rate mortgage holders “would be forced to bear a disproportionate burden through interest rates. Borrowers are being held to ransom for the past mistakes of lenders at a time when they are severely stretched with the introduction of a raft of State charges.”
Ciaran Phelan, chief executive of the Irish Brokers’ Association, said the cut “should be only the start of such moves, and variable rate customers should no longer be used to subsidise other mortgage holders who are lucky enough to have tracker mortgages with this bank”.