Bank of Ireland says it won't be cutting its variable mortgage rate.

During the week, the Minister for Finance said he'd secured agreement from the six main banks that they would start reducing the rates in July.

The ECBs lending rate is at a record low, but variable mortgage holders in Ireland still pay among the highest rates in Europe.

The Sunday Independent reports that instead of reducing variable mortgages, Bank of Ireland will encourage its customers to change to fixed rate deals.

Michael Noonan has said the banks that don't cut their variable rates could face a levy in the budget.