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Home loan joy as ECB rate cut on cards

MORTGAGE holders could be in line for an early Christmas present if the ECB decides to cut rates in November.

Homeowners were given a reprieve when the European Central Bank halted its policy of a series of interest rate hikes.

The main interest rate remains now unchanged at 1.5pc, providing relief for those on tracker mortgages.

But some analysts are expecting ECB bosses to go even further and slash interest rates by the end of the year.

A total of 400,000 homeowners are on tracker mortgages and a further 200,000 variable mortgage holders could also benefit as lending institutions come under pressure to pass on the cuts.

A 5pc cut in total would mean a family with a €300,000 tracker mortgage would see payments fall by €90 each month.

For every 0.25pc cut, homeowners would save €15 per €100,000 of their overall mortgage total.

The European economy has been held back by a lack of spending, low employment prospects and a dishevelled housing market, but the bank is eager to bring the area back to growth.

US President Barack Obama has already stepped up to the mark, announcing a $447bn (€321bn) plan to kickstart employment and growth in the economy, which includes a 50pc cut in payroll tax.

The debt crisis in Europe threatens to engulf the continent's banks and cripple global finance.

This, coupled with tight borrowing conditions and brutal austerity measures in countries such as Ireland, mean that there is limited growth.

There were some fears that the lending rate would be pushed up to combat growing inflation in the eurozone.

But ECB President Jean-Claude Trichet has left the door open for possible rate cuts.

And many commentators have now said that the bank may be pushed to reverse the two rate increases it has announced this year.

Ireland has received a glowing report card from the ECB.

Mr Trichet said that Ireland was "gaining credibility" for its efforts to deal with the budget deficit.

There is now a 92pc likelihood that there would be a Eurozone rate cut, one leading money-market indicator outlined.

Goodbody's Dermot O'Leary anticipates two cuts of 0.25pc -- but doesn't expect this to kick in until January.

"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."