Permanent TSB is to cut its standard variable interest rate for residential mortgage holders by 0.50 percentage points.
The bank said the cut will see its variable mortgage rate move from 5.19% to 4.69%, which moves it closer in line with its main competitors' rates.
The cut will take effect from May 14 and will result in savings of about €52 a month for a customer with a mortgage of €200,000.
About 74,500 customers will benefit.
Permanent TSB's chief executive Jeremy Masding also said that the bank will keep all its lending rates under regular review.
He said today's reduction was part of the bank's strategy to create a new viable, banking business focused on the retail market.
''We are setting out to create a more competitive bank, that has a viable future in this market and that treats its customers fairly. This move is an important statement of our intent,' he added.
The move follows agreement last week from the EU/IMF troika for a plan to split off about €12 billion in loss making loans from Permanent TSB into a bad bank.
Rates are still too high: PIBA
The Professional Insurance Brokers Association, the country’s largest group of independent financial brokers have reacted by saying this should mark the beginning of interest rate cuts by all lenders on the basis that current lending rates are still too high, given market conditions.
"Permanent TSB rates are one of the highest in the market, despite having passed on ECB rate cuts in both November and December of last year. Permanent TSB should also consider lowering its five year fixed rate which currently stands at 8.75%," said PIBA's chief operations officer Rachel Doyle in a statement.
