Borrowers gain little from ECB rate cuts
Published 13/02/2016 | 02:30
MOVES by the European Central Bank (ECB) to cut its main lending rate to encourage banks to lend are not benefiting mortgage holders here.
New figures from the Central Bank show the rates charged by banks in the Eurozone have fallen, but by little in Ireland.
The ECB cut its main lending rate from 0.15pc to 0.05pc in the autumn of 2014. Last December, the ECB deposit rate was lowered to minus 0.3pc.
Both of these actions were aimed at encouraging banks to lower borrowing rates for households and businesses.
Banks here responded with small lending rate reductions.
However, banks here have sharply reduced the interest rates they are paying on deposits left with them by savers.
The latest 'Retail Interests Rates, December 2015' publication shows new deposits are now paying just 0.21pc in interest.
On the mortgage side, lending rates have barely changed here since October 2011.
Across the Eurozone, mortgage rates have come down steadily over that period, according to the Central Bank publication.
The average mortgage across the 19 countries that use the euro currency is 1.99pc.
However, the variable rate here for new home borrowers is 3.76pc
Around 300,000 families are on variable mortgage rates.