EBS has cut its fixed rate mortgages across all terms as a result of global equity market problems and the move to the single currency. The cuts will result in savings for both existing and new borrowers from today.

EBS is the first society to cut its fixed rates - most lenders are taking increased margins on all their fixed rate business as rates on the international money markets have fallen.

Head of lending, Mr Martin Walshe, is also predicting end-year variable rates at around 5.1 per cent, significantly below the 5.5 per cent mentioned by Irish Nationwide managing director Mr Michael Fingleton only last week.

Others lenders are now likely to follow suit although many yesterday were stunned by what one called "very aggressive pricing".

The move is likely to please the Central Bank on the basis that it will encourage more people to move on to fixed rates - even at lower levels. The Bank is worried that a sharp cut in variable rates later this year could boost demand even more and add to inflationary pressures.

According to Department of the Environment statistics, released last week, the vast majority of loans are already on a fixed rate and this is likely to increase with the new loan structure now in place.

EBS has set its fixed rates so that it is taking the normal margin of around 1.5 percentage points over what is available on money markets.

Most other lenders are still taking 2 percentage points or more on many products.

The EBS one-year fix is 5.8 per cent (APR 7.1 per cent), while the two to four-year loans are all priced at 5.6 per cent, from 6.6 per cent and 6.25 per cent respectively. A five-year loan is available at 5.8 per cent, while the 10-year is 6.3 per cent, from 6.9 per cent.

New customers opting for the one-year fixed rate also benefit from a discount, bringing the rate in year one to 4.8 per cent (APR 7 per cent).

According to Mr Walshe, the society is pleased to be the first to pass on the benefits of lower rates on world markets to borrowers. He added that a two percentage point fall was now likely in variable rates by the beginning of next year.

The annual percentage rates are likely to fall significantly into next year. At the moment they are based on a variable rate of 7.1 per cent for the non-fixed period of the loan.