Permanent TSB is to overhaul its pricing model for mortgages, introducing lower rates for some new customers from Wednesday.

For purchasers borrowing less than 50 per cent of the value of the property, the new variable rate will fall to 3.95 per cent.

However, those with house deposits of 10 per cent or less will pay more under the new system.

For those customers, the mortgage rate on offer will increase from Permanent TSB’s current standard variable rate of 4.34 per cent to a new rate of 4.45 per cent.

Permanent TSB director of lending, Ger Mitchell, said the bank will charge new customers different variable rates depending on the size of the mortgage relative to the value of the property.

“This is a much more sophisticated pricing model for mortgages which will allow us to reward customers who have a lower risk profile while charging a higher rate from customers who represent a higher risk by virtue of the amount of money they are borrowing relative to the value of the property.”

The new rates will be available to people moving their mortgage from their current bank as well as first time buyers.