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375,000 may get tracker boost

HOMEOWNERS with tracker mortgages may receive a Christmas boost following predictions of a fresh eurozone rate cut.

Investors are predicting that the European Central Bank (ECB) is likely to signal a reduction in its key interest rate when it meets tomorrow.

Another drop in ECB rates would see a family on a €250,000 mortgage paying €30 a month less in repayments.

Over a year, this would amount to a saving of €360 – roughly the cost of the property tax on an average home.

Around 375,000 people in Ireland have tracker mortgages – with the contracts stating that the interest they pay must change when the ECB rate moves.

A cut in interest rates could come this week or at December's meeting of the ECB.

Rates have come down from a high of 4.25pc to a record low of 0.5pc. This is the equivalent of 15 cuts of 0.25pc.

ECB policymakers are expected to react to falling inflation and forecast that the eurozone economy will expand slightly more slowly next year than previously expected.

Economist with KBC Bank, Austin Hughes, said the markets were convinced that the rates would change this week or at next month's meeting of the governing council of the European Central Bank.