Mortgage rates will fall by about 1.75 percentage points by the end of the year, according to Irish Nationwide's managing director, Mr Michael Fingleton.
Mr Fingleton said he expected variable rate mortgages to be around 5.5 per cent or 5.75 per cent once we enter EMU. Most variable rates are now on offer at between 7.25 per cent and 7.5 per cent, without the first year's discount.
He added that, despite speculation that inter-bank rates could be as low 3.5 per cent, savers would still be paid about 4 per cent for substantial deposits. "A premium will have to be paid to hold on to depositors who will not be left out," he said.
Mr Michael Torpey, treasurer at the country's largest lender, Irish Permanent, also said depositors will be the winners as deposit rates cannot come down significantly.
He added that he expects variable mortgage rates to be around 5.75 per cent at the end of the year.
Mr Fingleton added that most of the cuts will not materialise until the Central Bank cuts rates, although some institutions may move earlier to try and grab some market share.
Mr Fingleton also said longer-term fixed rate mortgages are likely to remain around current levels. However, competition could mean a half a percentage point cut in the three and five-year loans.
