From next Friday, mortgage holders with Irish Permanent can look forward to lower variable lending rates. But borrowers with other financial institutions can also expect them to follow suit in the wake of the Central Bank's decision to reduce official interest rates.

What remains uncertain, however, is by how much institutions will cut and whether they will match or better the reduction of three quarters of a percentage point announced by Irish Permanent.

An EBS spokesman said that as the only committed mutual building society, it would aim to maintain its pre-eminent position in offering value to customers.

Meanwhile, Mr Richard Hoare, general manager, retail banking, at First Active said that the Central Bank's decision would be considered in the light of how markets would settle and First Active's decision to reduce fixed rates last week. "The competition is in fixed rates," he said.

The head of marketing at TSB, Mr Sean Curtis, said that rates would be reduced next week, although fixed rates were reduced last week, while an AIB spokesman would only say that the bank was closely monitoring the situation. Ms Sinead Kelleher, information manager at National Irish Bank, said the bank would be watching money markets closely next week following the Central Bank's "aggressive move". NIB reduced its variable rate by half a percentage point to 7.1 per cent on Wednesday, in anticipation of the Central Bank's move.

The outlook for savers, however, is gloomy. Irish Permanent said savings rates would be reduced in line with the cut of 0.75 of a point in the variable rate and other institutions are also set to lower the rates paid to depositors.