ACCBank cut its standard variable mortgage rate to 5.25 per cent yesterday matching the European Central Bank rate cut of 0.5 of a percentage point announced on September 17th. The reduction for mortgage holders has come almost a month after the ECB cut.

But Irish Permanent/TSB, First Active, EBS and Bank of Scotland have not yet passed on the latest half-point ECB rate cut to their existing standard variable rate mortgage holders. Bank of Scotland said it would cut its standard variable rate to 4.79 per cent at the beginning of November - at 0.4 of a point the reduction is less than the full ECB cut.

Customers of Irish Permanent/TSB will not benefit until November 1st when their rate will be reduced by 0.44 of a percentage point to 5.2 per cent, again under the ECB cut. Existing EBS customers will only get a reduction of 0.4 of a point when the second round cut to 5.1 per cent comes into effect on November 1st. First Active customers will get less than the full benefit too - on November 2nd their rate will be reduced by just 0.39 points to 5.24 per cent.

Most Irish banks and building societies have not passed on in full the recent ECB rate cuts to their variable rate borrowing customers and most have been slow to implement the reductions. On August 30th the European Central Bank cut interest rates by a quarter of a percentage point to 4.25 per cent. On September 17th it cut rates again, this time by half a percentage point to 3.75 per cent.

The total ECB rate reduction was 0.75 of a percentage point. A survey of standard variable rates for existing mortgage holders shows that institutions have (or will have by November 2nd) implemented cuts of 0.78 points to 0.55 points. Ulster Bank is the only institution to have cut by more than the ECB - a total reduction of 0.78 of a percentage point in two stages to 5.1 per cent from 5.88 per cent.

ACCBank was the only institution to implement the full rate cut - from 6 per cent to 5.25 per cent in two stages. Other reductions have ranged from the highest of 0.69 points - Irish Permanent/TSB and ICS - down to just 0.55 points. Tusa made the smallest cut combining the ECB moves in one cut on October 1st from 5.3 per cent to 4.75 per cent. While its total 0.55 point cut was the smallest, the Tusa variable mortgage rate will remain the lowest in the market, along with AIB, after the current round of cuts.

The earliest the ECB August 30th quarter-point rate cut was implemented for variable rate mortgage holders was on September 7th when National Irish Bank implemented the full 0.25 point cut to bring its rate to 5.64 per cent. A number of institutions - Ulster, ACC, AIB and Bank of Ireland cut their rates between September 10th and 18th. But Irish Permanent/TSB, Tusa, EBS and Bank of Scotland customers had to wait for the benefit of the first cut until October 1st while First Active customers had to wait until October 4th.

Ulster was first to follow the second reduction in ECB rates. Ulster cut its standard variable rate by the full 0.5 of a point to 5.1 per cent on September 20th, three days after the ECB. Other institutions did not start to implement their cuts until October. National Irish Bank cut its rate by just 0.39 of a point from 5.64 per cent to 5.25 per cent on October 2nd while AIB reduced by 0.48 of a point from 5.23 per cent to 4.75 per cent on October 4th. But customers of Irish Permanent/TSB, EBS, First Active, and Bank of Scotland are still waiting for the second round of rate cuts.

A sample of the rate cuts and timings shows: AIB's first reduction came on September 17th with a cut of 0.195 of a percentage point to 5.23 per cent - less than the full 0.25 points cut by the ECB. This was followed on October 4th by a 0.48 point cut in the rate to 4.75 per cent - just under the 0.5 point ECB cut and about two and a half weeks later. Overall AIB cut rates by 0.675 points. At Irish Permanent/TSB existing customers got the full benefit of the first ECB cut but only from October 1st. The second cut will only come into effect from November 1st when the rate will be reduced by 0.44 points, a total reduction of 0.69 of a point.

The financial institutions reject the accusation that they are using the ECB rate moves to boost their own margins or profits on their core lending and savings operations. They argue that in any rate changed margins are balanced out across a wide range of lending and savings products.

Bank analyst with Davy Stockbrokers Mr Scott Rankin said that while overall margins were coming under pressure the institutions seemed to be widening their lending margins to ease the pressure on the deposit side where rates are so low it is difficult to implement further cuts.

Market sources suggested that some financial institutions are now increasing the profits they make on some mortgage lending as well as on personal loans and overdrafts to offset lower profits on deposits.