Banks set to cut mortgage rates as deadline looms
Banks are lining up to cut their mortgage rates.
State-owned Permanent TSB is set to announce that it will allow its existing customers to avail of cut-price rates that are only given to new customers at the moment.
This could see some existing customers making big savings.
And Ulster Bank is set to announce lower rates for its existing customers, the Irish Independent has learned.
Finance Minister Michael Noonan has set a deadline of next Wednesday for banks to respond to his demands for cuts to rates.
KBC Bank is also understood to be getting ready to reduce the interest it charges existing mortgage holders. Its variable rate is one of the highest in the market at 4.5pc.
Some 300,000 people are on variable rates, which are among the highest in the eurozone.
An Irish borrower with a variable rate mortgage of €250,000 is paying around €4,000 a year more than an average borrower in the eurozone.
Permanent TSB is set to allow existing customers to avail of good value loan-to-value (LTV) rates. With these LTV mortgages, the more the property is worth compared with the amount borrowed, the lower the rate.
The bank cut these LTV rates at the start of the year but controversially it restricted the lower rates to new customers only.
Experts said the latest move could mean huge savings for those who have built up a lot of equity in their homes.
Some LTV rates are as low as 3.7pc, compared with the standard variable rate of 4.5pc Permanent TSB. A family moving on to that LTV rate from a variable could save €1,200 a year on a €200,000 mortgage.
For those who are in negative equity, or only have a small amount of equity in their home, a new cheaper loan option will be introduced, it is understood.
The new LTV rates will be available to existing customers from the end of the summer.
A spokesman for Permanent TSB had no comment.
Ulster Bank is planning to reduce its mortgage rates for existing customers, but it is unclear whether this will be in the form of fixed-rate reductions or lower variable rates.
In response to banker meetings with Mr Noonan, only AIB has lowered its variable rates up to now.
Bank of Ireland responded recently by cutting its fixed rates. It is not expected to cut its variable rates.