HOMEOWNERS can look forward to the prospect of a cut in interest rates in time for Christmas -- and possibly by November.
And it is likely to be followed up by another reduction as early as February.
It will come as a timely boost for 400,000 homeowners who are on tracker mortgages -- and for 200,000 on variable mortgages as lenders will be under pressure to stop increasing interest rates. Indeed, some may even pass on the cuts.
The likelihood of two rate reductions next year has been on the cards for a few days but the chance of one before Christmas is seen by experts as an indication of how urgently the European Central Bank (ECB) wants to inject some growth into a stagnating eurozone.
The prospect of an imminent cut emerged after ECB boss Jean-Claude Trichet lowered projections for growth in the eurozone and said the risk of higher inflation was subsiding.
While lower eurozone growth may mean a cut in repayments in the short term, it poses a major threat to turning around our economy as lower demand could hit exports.
ECB boss Jean-Claude Trichet maintained rates at 1.5pc yesterday after two rises earlier in the year.
Effectively, the bank was forced to reverse its policy of raising rates to avoid further damaging the eurozone economy.
While signalling the U-turn, Mr Trichet took time to praise Ireland's efforts to get the economy back on track. He said we were "gaining credibility" for our efforts to deal with the budget deficit.
His comments are expected to be echoed by a progress report on the bailout deal from the European Commission today when it endorses our efforts to stabilise the economy through cutbacks and tax hikes.
On the interest rate front, markets are now increasingly expecting a cut.
One leading money-market indicator points to a 92pc likelihood of a eurozone rate cut in November.
US investment bank Morgan Stanley and Dublin-based Goodbody Stockbrokers are among those forecasting two rate cuts by next summer.
Goodbody's Dermot O'Leary said many in the markets expect the first rate cut in November.
"The chances of a cut in November are certainly now higher, but the ECB is unlikely to move that fast unless the eurozone crisis intensifies," he said.
He expects two cuts of 0.25pc starting from next January.
Monthly repayments come down by €15 for every 0.25pc rate cut on every €100,000 borrowed.
A 0.5pc cut in rates would mean a family with a €300,000 tracker having to pay €90 less a month. Over a year, this would work out at a saving of more than €1,000.
Around 400,000 homeowners who have tracker mortgages would benefit directly.
Tracker rates automatically change when the ECB rate changes.
Most of those who bought between 2004 and 2008 -- the height of the market -- took out tracker mortgages.
Another 200,000 who have standard-variable rates could also benefit as lenders would come under pressure to pass on lower funding costs to borrowers.
Lenders have repeatedly pushed up variable rates since 2009, with Permanent TSB now charging some customers 6pc.
Yesterday broker body PIBA (the Professional Insurance Brokers Association) said that the ECB should cut rates by 1pc to just 0.5pc. This would be in line with official interest rates in Britain.
Rachel Doyle of PIBA said: "The ECB is a conservative organisation that tends to respond to the needs of the larger EU states such as Germany rather than the needs of the union as a whole.
"If it were to do the right thing and row back on the recent increases, this would put huge pressure on Irish lenders to stall on any further increases."