Two more financial institutions have reduced interest rates in response to the cut in European Central Bank (ECB) rates last week. Irish Nationwide Building Society and ICS Building Society are the latest institutions to announce rate reductions for mortgage customers.
Irish Nationwide Building Society reduced mortgage rates by 0.25 per cent with immediate effect for new borrowers and from December 23rd for current borrowers.
Irish Nationwide cut its rates by a quarter of 1 per cent at the end of last month in anticipation of the ECB rate cut. The variable rate for new borrowers is now 4.23 per cent. A statement released on behalf of the society said it expected further ECB rate cuts in early 2003.
ICS passed on the full 0.5 of a percentage point cut in ECB rates to customers, with the standard variable mortgage rate falling from 4.7 per cent to 4.2 per cent. The cuts take immediate effect for new customers and from next month for existing customers, in compliance with the society's 30-day notice rule on rate changes.
The 0.5 per cent cut in the variable rate will mean monthly repayments for a customer with a €100,000 mortgage over a 20-year term will decrease from around €643 to €616, with an annual saving of €323.
ICS also made cuts across its range of fixed-rate mortgages, including an 0.5 per cent reduction on its one-year fixed mortgage.
AIB remains the most competitive lenders for variable rate mortgages having reduced its standard variable rate to 3.9 per cent earlier this week. Bank of Ireland, First Active, EBS, Ulster Bank, National Irish Bank and Permanent TSB have also announced rate cuts this week.
Delays in passing on rate cuts cost customers thousands each day, property finance company Simply Mortgages said yesterday.
Mortgage holders on variable rates were losing out on €64,000 worth of savings each day the ECB interest rate cut was not passed on by lending institutions, the company said.
The figure is based on the latest statistics from the Department of Environment and Local Government, which show that almost 82,000 loans were approved across the country in the previous 12 months at a total value of €11,556 million. The average mortgage amount was €141,179, with a little over half the loans taken out at a variable interest rate.
A half-point reduction in a €141,179 loan over a 20-year period would mean that each of the 45,800-plus variable rate mortgage holders stand to save €39 a month on their repayments or a total of almost €1.79 million in total per month. This equates to a potential saving of €64,000 a day for all borrowers who had loans approved in the past 12 months.
"These are significant savings that lending institutions are delaying passing on to their borrowers," said Mr Peter Bastable, managing director of Simply Mortgages.
