Wednesday 23 April 2014

Boost for homeowners as ECB set to signal summer cut in interest rate

ECB President Mario Draghi

HOMEOWNERS with tracker mortgages won't get any relief as European Central Bankers meet today, but there is a strong chance of a cut in interest rates this summer. The European Central Bank's rate is at an all-time low of 0.75pc; however, a number of economists now think that ECB president Mario Draghi will point to an imminent interest rate cut when he speaks today.

A new cut would be a massive boost to the 375,000 people on tracker mortgages that follow the rates set by the ECB.

Each 0.25pc reduction eases monthly repayments by €15 on every €100,000 of debt.

Some economists are betting on the ECB signalling a rate cut is in the pipeline because of a slew of figures confirming that the eurozone remains in recession, combined with unease after an unprecedented levy on bank deposits in Cyprus.

ECB policymakers meet against a backdrop of bleak economic data, and concern that Slovenia could follow Cyprus and seek a bailout.

The Central Bank is widely expected to hold off on an interest rate cut this month, instead waiting to see if a grim economic picture in the eurozone brightens before using its limited remaining margin for manoeuvre to lower borrowing costs further.

A Reuters poll last week pointed to interest rates remaining on hold today.

Irish Independent

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