THE State's two biggest banks, AIB and Bank of Ireland, have joined in the latest round of interest rate cuts, announcing reductions in mortgage and deposit rates.
Following similar moves by Ulster Bank, Irish Permanent, and Irish Life Home Loans last week, AIB and Bank of Ireland have announced lower interest rates for customers from Wednesday.
AIB is to cut its variable mortgage rate by just over a quarter of one percentage point from 7.45 per cent to 7.10 per cent. Its personal and business loan rates will fall further, with the bank taking up to a half of one percentage point off.
The rate of interest on business overdrafts will drop from 10 per cent to 9.5 per cent, with term loans for up to seven years, also trimmed 0.5 of a percentage point.
Savers, however, will see the biggest rate reduction, with deposit rates set to fall by up to 1 per cent.
Interest rates on AIB's special savings accounts will all drop by a point on amounts of up to £50,000, according to the bank. The rate of interest paid on notice deposits of up to £100,000 and over will also be cut, with the highest rate of interest to fall from 6 per cent to 5 per cent.
Customers with ordinary demand deposits will earn just 0.25 of a per cent on their savings.
Bank of Ireland has reduced its variable mortgage interest rates by a quarter of a point, from 7 per cent to 6.75 per cent. Personal loan rates will also fall by 0.25 of a point, the bank said yesterday, from 11 per cent to 10.75 per cent.
Deposit rates will be cut by a quarter of one point, bringing its regular saver rate down from 7.5 per cent to 7.25 per cent.
First National Building Society is expected to follow the banks shortly, announcing cuts of around a quarter of 1 per cent in its deposit and mortgage interest rates.
Speaking after the group's annual general meeting yesterday, the group managing director, Mr John Smyth, said it would be considering its rates over the next 48 hours.
Customers with ordinary immediate access deposits, he said, are likely to suffer most with these rates to move to very low levels.
"It is difficult to see them falling further, but rates will be cut," according to Mr Smyth.
