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 which are currently only given to new customers.
This could see some existing customers making massive 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 high variable rates or offer low fixed rates to established customers.
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. Some 320,000 existing borrowers have variable rates.
Permanent TSB is set to allow existing customers to available of good-value LTV rates.
These loan-to-value (LTV) rates are low risk for banks. 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 LTV rates to new customers only.
Experts said this could mean huge savings for those who have build up a lot of equity in their homes.
Some of the LTV rates are as low as 3.7pc, compared with the standard variable rate of 4.5pc.
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 built up 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.
The State-owned bank, which includes EBS and Haven, cut them last year, and again in the past few weeks.
Bank of Ireland responded to the minister’s demands by recently cutting its fixed rates, encouraging existing customers to move to these rates.
It is not expected to cut its variable rates. Other banks, which are not fully regulated here are not expected to reduce their variable rates.