Three banks have refused to pass on the latest European Central Bank interest rate reduction to mortgage customers on variable rates.

The second ECB rate cust of 0.25% will cut around €45 a month from the monthly bill of a customer with a 25 year €300,000 mortgage. But it will only be passed on automatically to those on tracker mortgages and the banks are not obliged to pass the cut on to those on variable mortgages.

AIB, Ulster Bank and National Irish Bank said they would not pass on the latest rate cut. All three also failed to pass on November’s rate cut, although AIB eventually relented after significant pressure was applied.

A fourth bank, EBS, which is now part of AIB, will reduce its variable rate by 0.35 points.

The quarter-point cut automatically applies to tracker mortgage holders with both institutions.

Bank of Ireland has said it will cut its variable mortgage rates by 0.15 points. The bank did not pass on November's quarter-point rate cut. In a statement, it said its funding costs remained high and it would keep rates under review.

Permanent TSB says it will pass on the cut to its variable rate mortgage customers, as well as tracker customers. Permanent TSB also said it planned to reduce interest rates on a number of variable rate mortgages held by both residential and investor customers by as much as 0.71 percentage points - including the the impact of today's ECB cut.

Irish Bank Resolution Corporation has also confirmed that the full quarter-point rate cut will be passed on to former Irish Nationwide Building Society variable rate mortgage customers. The rate reduction will come into effect from January 1.

AIB says it and EBS both passed on November's rate cut in full. The bank says its mortgage portfolios are currently loss making, and that this undermining the prospect of a future return to Irish taxpayers on their significant investment in the bank.

AIB says the cost of funding the bank is no longer determined by movements in the ECB's rates, due to the higher price of attracting deposits and "the continuing absence of a functioning wholesale market".

The bank says it is cutting its rate for standard overdrafts for small businesses by 0.6 percentage points, while AIB personal overdraft rates also come down by 0.6 points.