ICS has become the latest lender to cut its variable mortgage rate, following the Central Bank's reduction last Friday.

It is not yet clear when its rates for savers will be cut.

ICS's variable mortgage rate is now 5.99 per cent, just marginally below Irish Permanent's 6 per cent announced on Friday.

The 0.75 point reduction takes effect from yesterday, while Irish Permanent's will come into effect on Friday.

All the lenders are expected to announce cuts over the coming weeks in response to the official reduction.

However, some lenders such as EBS are likely to wait for a couple of weeks before announcing new rates. EBS's variable currently stands at 6.35 per cent.

Lenders also expect further cuts in December. A spokesman for ICS said they would expect a further cut of 0.5, bringing the rate to 5.49 per cent.

That is the discounted rate currently on offer to new customers but not to ICS's existing customer base.

Mr Michael Fingleton, managing director of Irish Nationwide, is also expecting a fall to 5.5 per cent.

The main inter-bank rate is now 3.69 per cent and will be cut by the Central Bank to 3.3 per cent by the end of the year to bring it into line with German rates.

Under normal circumstances that would point to mortgage rates around 5 per cent or even below.

But most institutions say rates cannot fall that low without severely hurting savers.

ICS's cut yesterday represents a saving of £22 a month on a £50,000 mortgage over 20 years.

Fixed rates remain at current levels, although a spokeswoman for ICS said they will be looked at over the coming weeks.

The two-year loan is fixed at 5.65 per cent, with the three-year at 5.7 per cent.