EBS will pass on rate cut, but NIB holds firm
Published 09/11/2011 | 05:00
FORMER building society EBS relented yesterday and decided to pass on the latest cut in eurozone interest rates to its variable-rate customers.
But Danish-owned National Irish Bank held firm and said it was going ahead with a rate increase of almost 1pc on Friday.
EBS said it would cut its variable rate from 4.93pc to 4.68pc. The cut of 0.25pc will mean that EBS, which is now part of AIB, will still have one of the highest variable rates in the market.
The bank said the reduction, which will take effect from December 1, meant that monthly repayments would drop by €14 for every €100,000 borrowed. The move will mean repayments on a €300,000 mortgage will drop by €44 a month to €1,534.
EBS is unusual among Irish lenders in having most of its mortgage customers on variables. With most other lenders, the majority of mortgage holders have tracker mortgages.
Permanent TSB, KBC Bank, Irish Nationwide and Bank of Scotland/Halifax have already passed on last week's cut.
But Bank of Ireland, Ulster Bank and subprime lender Start Mortgages are still holding out.
AIB is also refusing to pass on last week eurozone rate cut, but it argues that it did not increase its rates when the ECB raised its rate in April and again in June.
Yesterday, National Irish Bank said it was sticking with its plan to raise its variable rates by between 0.25pc and 0.95pc on Friday. This will see its variable rates rise to between 4.35pc and 4.6pc.
It said its lending costs were nothing to do with the ECB's interest rate, explaining: "The changes in no way relate to any ECB interest-rate fluctuations as the bank does not rely on the ECB for funding."
It added: "We did not change our variable-rate products when the ECB rate increased twice earlier this year."
The Taoiseach has said he would consider legislation forcing banks to pass on any cuts from the ECB.