Savers are likely to be sheltered from the full impact of the latest fall in interest rates, with Irish Permanent announcing that it is not cutting rates to depositors any further.
However, this will mean that the full half-point reduction announced by the European Central Bank will not be passed on to mortgage borrowers, with the Irish Permanent leading the way yesterday with a cut of 0.25 of a point.
The bank said that its new variable annuity rate will be 5.25 per cent while its discount rate for new mortgage business has been reduced to 4.75 per cent.
At the standard variable rate, the monthly cost per thousand borrowed on a mortgage will be £6.73, a saving of £7.02 a month on a £50,000 mortgage over a 20-year term.
The new discount rate for first-time borrowers will take effect from Monday, April 19th, but existing borrowers will not benefit from the lower standard variable rate immediately, with the company not yet announcing when the cut will come into effect.
As deposit rates are not falling, the other financial institutions will be under pressure to follow suit. "At this time we feel it is appropriate to protect our savers by holding their existing rates at their present level despite the 0.5 per cent cut in official rates", said Mr Michael Torpey, head of treasury at Irish Permanent.
Irish Permanent's decision to maintain savings rates - which vary from as low as 0.1 per cent to 3.75 per cent, depending on the size of the deposit and the term - while reducing mortgage rates will cut the bank's profit margins on its mortgage business.
The other lending institutions have yet to react to the ECB cut, but most are considering their rates and are expected to follow the Irish Permanent's lead in the coming days and weeks.
The EBS said that it would be considering how to balance the interests of both savers and borrowers while Bank of Ireland, First Active and TSB all said that they were considering the situation.