AIB refuses to pass on ECB rate cut

AIB said today that it will not be passing on today's 0.25% ECB interest rate cut to its variable-rate mortgage customers.

Bank of Ireland is to partially pass on the cut, reducing standard variable mortgage rates by between 0.1-0.15%. New Bank of Ireland customers will be offered a minimum variable rate of 3.4%.

"The bank's funding costs remain elevated and we will keep our interest rates including those for deposits under ongoing review," Bank of Ireland said in a statement.

The Government warned just hours ago that it would call in lenders and apply pressure if necessary so that mortgage holders would benefit from the 0.25% reduction.

In a statement, AIB stated that its mortgage portfolios are loss-making and to pass on the cut would "undermine future delivery of returns to the Irish taxpayer". It also pointed to its difficulty in attracting deposits due to "the continuing absence of a functioning wholesale market".

However, it said that variable-rate mortgages at EBS, which it now controls, will benefit from a 0.35% rate cut.

Permanent TSB was the first lender to confirm it will be passing on the cut.

Irish Bank Resolution Corporation Limited (formerly Anglo Irish Bank) confirmed that, in relation to former Irish Nationwide Building Society homeloan variable rate mortgage customers, the homeloan variable mortgage rate will decrease by 0.25%.

The rate reduction will come into effect from January 1, 2012.

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