Sunday 19 November 2017

Mortgage holders to be €1,000 better off in rates drop

Charlie Weston Personal Finance Editor

FAMILIES with a mortgage will be €1,000 better off this year thanks to falling lending rates, a report claims.

More than half a million households have a mortgage and are also in work, IBEC's Irish Consumer Monitor estimates.

These families with a mortgage will see their disposable income rise by a little more than €1,000 to €37,831.

This is what the families will have to spend after paying income tax, home fuel and light, petrol and diesel for motoring, health insurance and pension and life policies.

Families with a mortgage will be better off despite higher taxes and sharp rises in petrol, home energy costs and health insurance.

"Mortgage costs coming down is set to have a massive impact on spending power," IBEC's Fergal O'Brien said.

The economist, who based his findings on information from the Central Statistics Office, says working families with a mortgage will, on average, earn a gross income of €75,509 this year.

"Those with the largest mortgages will benefit the most significantly, but the reduction in the annual cost of the average mortgage payment of €1,300 is also a substantial saving," the report found.

It is good news for IBEC, which is anxious to see consumers spending again and thus help companies to prosper.

The European Central Bank is expected to cut interest rates for a third time next month, in a move that will benefit the 400,000 homeowners with tracker mortgages.

A portion of the cut is also expected to be passed on to some of the 255,000 homeowners with variable rates.

More than a quarter of a million homeowners who have tracker mortgages have benefited from two recent cuts in the ECB rate. Another cut is expected next month, which has not been factored into the figures.

Three cuts in ECB rates would shave €132 a month off repayments on a €350,000 tracker mortgage.


The IBEC report, seen by the Irish Independent has found that working homeowners who have a mortgage will have more disposable income.

But retired households, those who are unemployed and families that have paid off their mortgages, are set to see their spending power shrink.

The income of pensioners has stood up well up to now, but is now being hit by higher energy and health insurance costs.

This means that the average household will see its disposal -- or after-tax -- income fall to €29,732 this year. This is down €242 from last year.

Unemployed households will be on average almost €800 worse off this year.

And working households where there is no mortgage will have close to €700 less to spend this year, because of motoring and health insurance cost rises.

Irish Independent

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