Bank of Ireland is to cut the interest rate on its 12 and 18-month fixed-term deposits by 0.25 per cent from next week.
The Advantage 12-month fixed term return will reduce from 2.24 per cent to 1.99 per cent while the AER will reduce from 2.25 per cent to 2 per cent.
The Advantage 18-month fixed term will see rates reduce from 4.11 per cent to 3.73 per cent with AER from 2.73 per cent to 2.48 per cent. All changes will take effect from Tuesday.
Bank of Ireland said customers who are already in the process of opening a 12 or 18-month term deposit account can still avail of the existing rates if they open their account by the close of business on Monday.
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Irish households put an additional €6.9 billion into savings with banks and other financial institutions in 2024 compared with 2023, with a focus on term-savings accounts that offer higher interest rates.
Data from the Central Bank published in recent weeks showed household deposits dipped by €264 million in December, primarily driven by a €671 million decline in overnight deposits as people funded their festive spending.
On an annual basis, total household deposits were up by 4.5 per cent on 2023, or €6.9 billion. Consumers put €7.3 billion into accounts with an agreed maturity of up to two years. Overnight deposits, meanwhile, dropped by €962 million in the year.
Deposit rates hit their highest level in more than a decade last year as domestic banks responded to a record run of 10 rate increases by the European Central Bank’s (ECB) in the 15 months up to September 2023 as it looked to tame inflation.
With the ECB cutting its own rates four times last year, retail banks have since begun to reduce their own deposit rates, with Bank of Ireland previously cutting interest rates on its 12 and 18-month fixed-term deposits by a quarter percentage point last month.
Meanwhile, the Central Bank said that net lending to households increased by €3.2 billion, or 3.1 per cent, last year. This was mostly driven by loans for home purchase, which accounted for €2.5 billion of the total, it said, and “to a lower extent, by loans for consumption, with an annual flow of €952 million”.
