Mortgage holders could see interest rates cut by 0.5% before the end of the year, according to the chief executive of Irish Life & Permanent, Denis Casey.

Mr Casey made his prediction while announcing Irish Life’s financial figures for 2007.

Should he prove correct, a cut of 0.5% would save a mortgage holder €30 a month for every €100,000 borrowed over a 20 year period.

Mr Casey said that a reduced supply of new houses is likely to bring about a return to more normal activity levels in the housing market.