LEADING lender Permanent TSB is to cut its mortgage rate for new buyers by almost 1pc, -- the first time in almost four years that a bank has reduced its borrowing cost.
The move is expected to be followed by other lenders in what could be a crunch year for the mortgage market.
Experts have predicted that there could be a tentative revival of the market due to lower interest rates, a Budget-day boost for home buyers, and more lending by banks.
Permanent TSB will announce today that its variable rate for new buyers will drop to as low as 3.69pc from next Monday, the Irish Independent understands.
Existing borrowers will not benefit from the new rate, although the lender did cut all its rates for existing borrowers by 0.7pc last month.
Frank Conway, of Irish Mortgage Brokers, said: "Lenders have not been enticing new customers for close to four years now. They have been in lock-down mode."
The rate cut comes after Bank of Ireland last month said it had put together a new €1.5bn mortgage fund to support customers who were buying their first home.
Last month's Budget reversed moves to scrap mortgage interest tax relief for those buying this year.
This means a couple who buy before the end of this year will get up to €5,000 over the year in mortgage tax relief.
Some property experts expect property prices to bottom out this year.
AIB yesterday denied it was turning down first-time buyers for finance. AIB is approving three out of four mortgage applications.
The average new buyer has a deposit of between 10pc and 12pc of the property's price.
Head of mortgages Jim O'Keeffe said the bank approved 4,000 home loans last year.
But he admitted that just over €2 billion worth of mortgages were issued across the entire market last year, compared with €30 billion during the boom.
"We will convert the majority of mortgage applications into approvals," he said.
Mr O'Keeffe insisted that most borrowers were able to secure the amount of money they had applied for from the state-owned bank.
Lending experts said that nine out of 10 mortgage applications were approved during the boom, a time when lending criteria was thought to be too loose.