Permanent TSB has announced that it is to reduce its standard variable mortgage rate following the decision by the ECB to cut rates yesterday.

It will reduce the variable rate for home owners by 0.35% to 4.34%.

The bank says it will reduce payments on a 25-year mortgage with a current balance of €200,000 by €40 per month.

Permanent TSB also announced that it is to reduce deposit rates in the coming days.

Chief Executive Jeremy Masding said the standard variable rate reduction will benefit 80,000 customers and is part of the process of bringing mortgage rates more into line with competitors.

The bank has to be both financially strong, and strongly competitive for customers, he said, adding that mortgage rates had to be economically viable to allow the bank to return to profitability, he said.