Good news for mortgage holders: ECB rate hike 'years off'
There is unlikely to be a rise in European Central Bank interest rates for the coming years, a development that will be a huge boost to thousands of mortgage holders.
Moves by the US central bank, the Federal Reserve, on Tuesday to increase its interest rates and signal more to come had prompted fears of rate rises in the eurozone.
But the head of global strategy at Standard Life said in Dublin yesterday there was unlikely to be any move to hike European interest rates before 2019.
Andrew Milligan said international markets had not priced in any rise before 2019, and he did not see eurozone rates rising.
"The European Central Bank (ECB) is not going to raise interest rates," he said.
This view was backed up by Irish analysts.
Both Dermot O'Leary of Goodbody Stockbrokers and Alan McQuaid of Merrion Capital said a European rate rise was years off.
This will come as good news to mortgage holders, particularly those on tracker rates.
Trackers are pegged to the ECB lending rate, and cannot be increased unless the ECB raises its main rate.
It could be three to four years before interest rates rise.
It is estimated that about 350,000 mortgage holders are now on tracker rates, with about 300,000 on variable rates.
Another 100,000 are thought to be on fixed rates.
Founder of Askaboutmoney.com Brendan Burgess said fixed rates were not to be recommended, as variable rates were expected to fall. Mr Burgess quoted Central Bank data indicating the variable rate for existing mortgage holders is around 3.82pc.
Bank of Ireland boss Richie Boucher recently said he deliberately kept his bank's variable rate high to encourage customers to fix.
A bill to allow the Central Bank to force rates lower continues to be examined in an Oireachtas Committee.