Minister to press lenders for further rate reductions ahead of Budget
Finance Minister Michael Noonan said banks have agreed to start lowering their variable rates. Here we answer some of your questions.
Q: When will the cuts come in?
A: Homeowners with variable mortgages look set to benefit from reduced interest rates from this July.
The minister met with six lenders this week - AIB, Bank of Ireland, Permanent TSB, Ulster Bank, KBC and ACC. He now expects them to cut their variable rates in July, with expectations of further cuts. He is to meet them again before the Budget in October.
Some banks may attempt to wriggle out of reducing variables by opening up competitive fixed rates to existing customers. This is particularly the case with LTV (loan-to-value) rates where the interest you pay is lower when you have a lot of equity in the property.
Q: How much of a cut will there be?
A: The Government is said to be looking for an across-the-board cut in the standard variable rate of at least 0.75pc.
But Mr Noonan was careful not to quote a figure yesterday, instead insisting he wants banks to offer different interest options on variable and fixed rates to retain competition among banks.
Q: Will all banks reduce rates?
A: No pressure is being applied on smaller lenders. This means that if your mortgage originated with the likes of Danske, Irish Nationwide or Bank of Scotland/Halifax, you are unlikely to benefit from a rate cut.
And some of these lenders have sky-high rates. Danske has a variable rate of 4.95pc.
Unless the minister carries through with his threat to introduce legislation to give powers to the Central Bank to regulate rates, then there is little prospect of lenders no longer active in this market lowering rates.