Mortgage holders are waiting with bated breath for the European Central Bank’s (ECB) widely expected move to start cutting rates for the first time in two years next month. No doubt the rate cut, if it comes, will be hugely welcome for people who have seen their mortgage repayments soar much higher than they perhaps ever expected, given so much of the commentary of the last decade or so has implied the era of low interest rates may continue indefinitely.
Spare a thought for savers though. While interest rates jumped, deposit holders saw little, if any benefit from higher rates. Now, as the ECB prepares to cut, savers are already in the firing line of at least one bank.
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PTSB increased its one-year fixed deposit rate by 0.75 per cent to 2.75 per cent and its six-month fixed rate by 0.25 per cent to 2 per cent. Both of those lead their respecting markets, the bank said. But it also slashed its three-year fixed rate from 3 per cent to 2.1 per cent.
While PTSB is cutting one of its best-fixed rates isn’t an enormous surprise, “it should serve as a warning to savers that the higher rates that have been available over the past 18 months or so won’t be around forever”, said Darragh Cassidy of price comparison website Bonkers.ie.
“Irish savers are collectively missing out on billions of euro in interest a year by not putting their money into the best-yielding savings account. This apathy is also helping the banks make record profits. Now really is the time to do something with your money before savings rates start to fall,” he added.
Cutting the three-year deposit rate looks like a preview of coming events at many firms.
As with many industries, lenders tend to rely on their customers’ apathy when it comes to arranging to move banks. With interest rates starting to fall, it may be worth a customer’s while to shop around to get better terms.
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