Bank of Ireland cuts mortgage rates amid political pressure

DUBLIN, May 29 (Reuters) - Bank of Ireland announced cuts to its fixed mortgage rates on Friday, in the face of political and public pressure on lenders to cut rates deemed too high by the government and threats that they could be sanctioned.

The chief executives of Ireland (Other OTC: IRLD - news) 's banks were summoned to meetings with Finance Minister Michael Noonan last week and were told authorities could take control of setting mortgage rates or introduce a financial penalty if action was not taken.

Bank of Ireland, the only domestic lender to avoid falling under state ownership during the country's 2008 financial crisis, said it would cut its fixed rate by up to 0.30 percent and that this reflected the reduced cost of term debt to the bank.

Ireland's banks are under most pressure to reduce variable rate mortgages that are higher than the euro zone average, but Noonan said lenders could escape sanction once they offered mortgage holders a lower rate, whether it was fixed or variable.

Like most Irish banks, Bank of Ireland returned to profit for the first time since the financial crisis last year as the country's economy grew faster than any other in the euro zone.

Rival Allied Irish Banks (AIB) announced cuts to its variable rate mortgages earlier this month. (Reporting by Padraic Halpin; Editing by Pravin Char)