The banks are set to come under pressure after a lender entered the residential mortgage market with some of the lowest rates.
ICS Mortgages is launching into the residential market this week, with rates that are expected to force the banks to respond with a new round of interest rate cuts.
The new ICS variable rate is as low as 2.7pc for those with a loan to value of less than 50pc.
And it will offer a range of fixed rates below 3pc.
ICS is owned by non-bank lender Dilosk. It had concentrated on the buy-to-let market up to now after it acquired the ICS Mortgages brand from Bank of Ireland in 2014.
But ICS is now planning to put it up to the main banks in a move that will broaden the options for home byers.
The company's variable rate of 2.7pc for those borrowing half of the value of the property compares with rates as high as 3.9pc from some of banks, also for those borrowing around half the value of the property.
This means a homeowner switching from a mainstream bank, currently paying 3.9pc, would save €200 a month on a €300,000 mortgage by opting for the ICS Mortgages rate of 2.7pc. ICS is also offering three-year fixed rates starting at 2.55pc, and five-year rates from 2.6pc.
All the rates on offer are tiered, with lower rates for those borrowing less relative to the value of the property.
The new lender in the homes market is also trying to mark itself out from its competitors by allowing borrowers to overpay an additional 20pc off their mortgage in any one-year period.
There will be an option to take a three-month break in payments, up to three times throughout the mortgage term.
Chief executive and co-founder of Dilosk, Fergal McGrath, said the new mortgage offering will be available from brokers and directly from the company, starting from this week.
Mortgage broker Karl Deeter said: "This will force other lenders to follow suit because now the best rates in the market are only offered through intermediaries and the banks can't have that situation persist."