UNDER-pressure homeowners are in line for a major boost with a mortgage interest rate cut on the cards as soon as next month.
A new cut in European Central Bank rates would push them to a record low and mean those with tracker mortgages would see big monthly savings.
Over a year the savings would amount to ¿444 for someone on a ¿300,000 tracker.
And a new reduction in rates would pile pressure on banks to resist their stated aim of hiking variable rates again.
European Central Bank president Mario Draghi signalled the ECB stands ready to cut interest rates, warning that the economic downturn had now spread into parts of the 17-member eurozone that had not been affected up to now.
And there was no risk of inflation in the euro area, he said. Any threat of inflation would rule out a rate cut.
"In the coming weeks, we will monitor very closely all incoming information on economic and monetary developments and assess any impact on the outlook for price stability," Mr Draghi said in Frankfurt.
Economist with Goodbody Stockbrokers Dermot O'Leary said: "The 'monitor very closely' phrase has been used in the past as a signal for a future rate cut.
Mr Draghi also mentioned that a rate cut was discussed.
"Another rate cut is now a strong possibility in May," he said.
And KBC Bank's Austin Hughes said the ECB had run out of options so was now set for a rate cut in May or June.
A further 0.25pc fall in the ECB's main lending rate would be a massive boost for the 375,000 homeowners with tracker mortgage rates. A cut would come at a time when property tax bills are popping through letterboxes.
Each 0.25pc reduction eases monthly repayments by €15 on every €100,000 of debt.
The average tracker rate is around 1.25pc above the ECB rate – around 2pc.
And banks would find it impossible to again push up variable rates. These rates can be moved by banks at will.
Some 300,000 homeowners have variable rates, with banks imposing a series of rate rises last year.
Before the ECB met yesterday, AIB boss David Duffy said his bank was looking at increasing variable rates again this year.
And last month Bank of Ireland would not rule out another variable rate rise.
Mortgage expert Karl Deeter said that an ECB rate cut with no change in variable rates would be as good as a rate rise for lenders.
This is because the cost of borrowing for banks would come down if the variable rate remained unchanged.
"But the banks would not be able to increase variable rates as there would be political pressure not to raise variable rates again. Any variable rate rise would be seen as unfair and would likely increase the default rate as some people would give up paying," he said.
The gap between variable and tracker rates is so great already that people with the same mortgages are paying up to €300 more a month because they have a variable rate.
Addressing a news conference after the ECB held rates at a record low 0.75pc, Mr Draghi said discussion at the monthly meeting had been extensive and the consensus was to hold fire on rates this month.
The ECB's main worry is that its low rates are not reaching households and firms in the eurozone periphery, such as Ireland, mainly because banks' funding costs in crisis-stricken countries are higher than those in the core countries, pushing up loan costs.