Lending institutions have been urged to immediately pass on today's rate cut to homeowners with immediate effect.
In a joint move by the Federal Reserve, the ECB, Bank of England and others half a percentage point was cut today.
Following the move, Halifax-Bank of Scotland (Ireland) confirmed it is to pass the full rate cut on to its customers and other financial institutions are also being called upon to do likewise.
Fine Gael enterprise spokesman Leo Varadkar said the rate cut must be passed on to homeowners in full. "This co-ordinated interest rate cut from the ECB, the US Federal Reserve and the Bank of England is very welcome and will provide much-needed relief to hard-pressed homeowners," said Mr Varadkar.
"However, it is essential that the new rate is passed on to homeowners as soon as possible, as homeowners with an average €250,000 variable rate mortgage would benefit by €105 a month. He said banks would be saving €1.3 million for every day they fail to pass on the lower rate.
Construction Industry Federation (CIF) director general Tom Parlon said: "Banks need to now start lending again to customers and the must immediately pass on the full benefit of these savings announced to their customers.
"Combined with the positive decision by the Irish Government, last week, to put in place a stabilisation package for the banking sector, we now have a very changed economic environment here in Ireland.
"New property prices have been reduced by up to 30 per cent, with many builders selling at cost. It is vital for the economy that we get activity in the housing market. We need to get liquidity moving, which is what the Government decision of last week was intended to do and we need to see the full benefit of these savings passed on to businesses and consumers."
The Irish Small & Medium Enterprises Association (Isme) also called for the rate cut to be passed on the customers. The reduction in rates will only be effective if the lending institutions pass on the benefit in full to their customers instead of their usual foot-dragging, thereby further increasing the banks' profit margins, the group said in a statement.
Isme chief executive Mark Fielding, said "This is not a time for bank profiteering, especially when the economy is in recession and the taxpayer has recently bailed out the Banks. While the Banks are benefiting from State support, small business in particular is suffering due to increased costs, erosion in competitiveness and cash flow difficulties."
Chambers Ireland Chief Executive Ian Talbot said the "extraordinary collaboration” will help to both sustain the financial markets and limit the impact of the current financial crisis on the economy.
"This rate cut will restore confidence and support investment. It was the correct decision given the current crisis in financial markets and the reality that inflationary pressures have eased recently," he added.
"We trust that it will enable house holders to shop more confidently and result in higher footfall in our shopping centres and main streets”.
