THE recent reduction in interest rates means another repayment cut for most mortgage holders. But did you know exactly how much your rate was reduced in comparison to other lenders? And if you also happen to have a savings account, did you know that your deposit is probably subsidising someone else's house loan?

The accompanying table, from National Deposit Brokers, (NDB), shows just how generous or parsimonious the financial institutions have been in passing on the recent quarter of a percentage point rate cut announced by the Central Bank. Mortgage interest has been dropped by a quarter of 1 per cent by virtually every lender except AIB which cut its rate by a third of per cent. (NIB and TSB had dropped their rates by a half and third of 1 per cent respectively before the Central Bank announcement.)

This is good news for borrowers who haven't seen such low rates for over 30 years, but the same generosity was not extended to the financial institutions' depositors in more than half the demand accounts surveyed by NDB, deposit rates were dropped by a half of 1 per cent twice the level of mortgage cuts with only a small number of institutions, notably Bank of Ireland and Irish Permanent taking pity on their depositors to keep their cuts to a fraction of 1 per cent.

Cross subsidisation i.e setting the level of deposits to help to fund the cost of lending has become such a feature of banking these days that it is hard for the average saver to know what to do with short term money in particular. In the case of popular, low DIRT Special Savings Accounts, the table show how rates went down between a half and 1 per cent for such 30 day accounts. Since these accounts require a month's prior notice for a withdrawal, these account holders were hit automatically with the cut, without any opportunity to switch their money elsewhere.

Anyone with substantial money on short term deposit with a building society might be forgiven for wondering why they are being so badly treated after all, the building societies source most of their funds from depositors. But the reality of our hyper competitive mortgage market is that the societies cannot afford to offer dearer mortgage lending rates if they want to maintain market share.

Meanwhile, Douglas Farrell of National Deposit Brokers is calling for the institutions to treat their depositors with the same courtesy they show borrowers, and inform them by letter of impending rate changes", including the date at which the change will apply. The current, unsatisfactory practice, he said is for the deposit institutions to take out newspaper advertisements which many customers may not see.