Permanent tsb becomes latest Irish lender to cut mortgage rates

DUBLIN, July 1 (Reuters) - Ireland (Other OTC: IRLD - news) 's Permanent tsb (Berlin: IL0A.BE - news) (PTSB) cut mortgage rates on Wednesday in response to political pressure on lenders to reduce rates deemed too high by the government and threats that they could be sanctioned.

Following meetings with Finance Minister Michael Noonan in May, banks were given until the start of July to offer cheaper mortgages to customers or risk authorities taking control of setting rates or introducing financial penalties.

PTSB, in which the government cut its stake to 75 percent in a 400 million euro share sale in April, said it would cut its variable rate mortgages to between 3.7 and 4.3 percent from 4.5 percent, depending on the size of a customer's outstanding loan.

The bank, which unlike most Irish lenders has yet to return to profit since the start of the financial crisis, is confident it can achieve its previously communicated net interest margin target of 1.7 percent by 2018, it said in a statement.

Allied Irish Banks has also announced cuts to its variable rate mortgages while Bank of Ireland and the Irish unit of KBC have said they will reduce the cost of fixed-rate terms. (Reporting by Padraic Halpin; editing by Jason Neely)