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Sandra Malone, 30 Aug
In some good news for Irish homeowners, mortgage holders can soon
expect a string of interest rate cuts which will offer relief to
thousands across the country.
The move comes as inflation has declined in recent months across the
eurozone, allowing the European Central Bank (ECB) to cut
rates. Inflation across the eurozone in October 2022 stood at 10.6% in
comparison to 2% now.
When can people expect to see cuts?
Those who are on tracker mortgages can expect two interest rate cutes
within the next three weeks. One of which will be offered as a one-off
special cut in the interest rate their payments are based on.
On top of this, the ECB is on course to further cut interest rates next
month as new inflation figures for Germany, Spain and Ireland showed
the rate of price increases is coming down.
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Another reduction in rates also looks likely to occur in December,
meaning Irish mortgage holders should see their interest rates decline
steadily before the end of the year which will no doubt be a welcome
relief for many.
How much is being cut?
Specialist bank Investec Analyst Justin Doyle says: "Investec is
pricing in a 0.25 percentage point ECB cut next month, in line with
market expectations, and another 0.25 cut in December." He added that
the firm expects an even further full percentage point of cuts next
year.
Who will this affect?
Those with tracker mortgages are in line for a special 0.35 percentage
point reduction next month when the ECB implements technical
adjustments to its interest rates. This adjustment to the refinance
rate will bring it in line with the ECB deposit rate. The ECB Governing
Council are due to meet on September 12 where it is likely to announce
further cuts.
Around 25% of Ireland's mortgage market are customers with tracker
mortgages. This means the cuts will be felt by 180,000 across the
country.
This will be a welcome relief for those with tracker mortgages as they
have been the worst hit by ECB hikes.
However, brokers have said that those subject to variable and fixed
rates may not see any cuts. This is because the recent cuts in fixed
and variable rates by Bank of Ireland, AIB, EBS, Haven, Avant Money and
PTSB were "priced in" June's rate reduction and the one due in
September.