Permanent TSB cuts interest rates

More than 70,000 mortgage customers with Permanent TSB got a reprieve this afternoon as the bank announced it would cut its standard variable rate by half a per cent.

The cut will come into force on May 14th, and will apply only to residential mortgage holders – about 74,500 customers. The average customer with a mortgage of €200,000 will see repayments fall by just over €52.

The reduction means that Permanent TSB’s variable rate moves from 5.19 per cent to 4.69 per cent, closer in line with other banks. However, the bank still remains more expensive than competitors' variable rates.

Chief executive Jeremy Masding said its lending rates were under regular review.

“We are setting out to create a more competitive bank, that has a viable future in this market and that treats its customer fairly,” he said. “This move is an important statement of our intent.”

But industry figures said further rate cuts were needed to bring Permanent TSB into line with other State owned banks.

PIBA, which represents independent financial brokers, said it should only be the beginning of interest rate cuts by all lenders, as current lending rates were still too high, given market conditions.

"Permanent TSB rates are one of the highest in the market, despite having passed on ECB rate cuts in both November and December of last year," Rachel Doyle, Chief Operations Officer at the organisation, said.

She said the bank should also consider lowering its five-year fixed rate, currently at 8.75 per cent.

"This should be only the start of such moves and variable rate customers should no longer be used to subsidise other mortgage holders who are lucky enough to have tracker mortgages with this bank,” said Ciaran Phelan, chief executive of the Irish Brokers Association.