Borrowers hoping that the latest move by Bank of Scotland will prompt another round of mortgage rate reductions may be disappointed.
The Educational Building Society, which in the past has positioned itself as the most competitive lender in the market, has already indicated that it will not be responding to the move. The EBS believes this reflects a failure by the new arrival to lure business away from existing lenders.
"There will be no immediate reaction from EBS," Mr Martin Walsh, head of lending at the society, told The Irish Times. "The only figures we have seen from Bank of Scotland are approval figures, and it would seem likely that there were difficulties in converting these to advances as their rates had been matched across the Irish market by virtually all lenders."
The surprise cut by Bank of Scotland led many to hope it would trigger another round of mortgage-rate reductions, as happened when it first entered the Irish market in August, but if other lenders adopt the stance taken by EBS, their hopes may be dashed.
Irish lenders may also be reluctant to take any action ahead of a crucial European Central Bank (ECB) meeting next week.
Stronger-than-expected German inflation figures, released yesterday, combined with recent warnings from ECB officials about growing price pressures, have fuelled fears that the bank may raise rates at the November 4th meeting.
Bank of Scotland announced on Sunday that it was cutting its lending rate from 3.99 to 3.69 per cent and would also contribute £500 (€635) toward borrowers' legal fees. The bank said it was "delighted" with the successful inroads it had made into the market, but declined to reveal how many loans it had advanced.
Some lenders believe however that the gap between Bank of Scotland's rate and the rates offered by other institutions following the latest round of reductions may not have been enough to persuade sufficient numbers of borrowers to abandon their existing banking relationships.
Mr Walsh said Bank of Scotland's reluctance to offer fixed rates reinforced doubts about its commitment to long-term value.