Savers to lose out as banks cut high rates for deposits
THE days of high interest rates for savers look numbered after nine banks reduced what they will pay to depositors.
Savers have benefited for almost four years from a price war that has seen banks outbidding each other to offer juicy interest rates.
Banks have been desperately trying to entice consumers to deposit cash since the collapse of Lehman Brothers in 2008.
Households here have €92.1bn on deposit at 13 different banks and building societies, according to the Central Bank.
The battle to attract deposits has led to a situation where eight deposit-takers are currently paying 3pc or more for demand deposits -- money that can be accessed without delay. Regular savers can get 4pc or more.
AIB is paying a higher interest rate to savers than the rate it lends out on mortgages.
Now banks have cut deposit rates in a move experts said was a indication that the savings price war was coming to an end. Among those to reduce their deposit rates are AIB, EBS, Investec, Permanent TSB, Ulster Bank, Bank of Ireland, KBC Bank, National Irish Bank and Nationwide UK (Ireland), according to research carried out for the Irish Independent by IrishDeposits.ie.
Permanent TSB has cut six different deposit rates, including its six-month, one-year and five-year rates. The two-year rate has come down by 1pc to 6.5pc.
Lower savings rates will allow PTSB to pass on more cuts to its variable mortgage holders, the bank said.
"Deposit rates are a key influence on mortgage rates and deposit rates in Ireland have been exceptionally high for the past number of years," a spokesman for the lender said.
Harry Slowey of IrishDeposits.ie said Bank of Ireland had adjusted its savings rates down a number of times lately as it attempted to balance getting enough savers' cash into the bank to meet Central Bank demands, with a desire not to offer interest rates so high it continues to lose money.
Goodbody Stockbrokers Dermot O'Leary warned savers that interest rates were set to keep falling: "At the moment, deposits are basically shifting around the system because there is a price war going on."