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Hopes growing for Christmas mortgage cut

THE prospect of a reduction moved closer after a survey of European economists concluded that a cut was imminent.

New boss Mario Draghi (pictured) takes over at the European Central Bank today, prompting expectations of a rate reduction.

A cut would benefit 400,000 people on tracker mortgages here, as the rates on these home loans have to automatically change when ECB rates change.

An ECB cut would also put lenders under pressure to pass on any cut to more than 200,000 Irish homeowners who have variable mortgages.

Every 0.25pc cut will reduce monthly repayments by €15 on every €100,000 borrowed.

Last month, Irish financial regulator and deputy govenor of the Central Bank, Matthew Elderfield got tough with lenders and told them to stop hiking variable rates. He also indicated he wanted lenders to cut variable rates when the ECB lowers eurozone rates.

Pressure for a cut rose after the Organisation for Economic Co-operation (OECD) called for a decrease in eurozone rates.

ECB governors meet this week with expectations they may indicate a rate cut will be implemented before Christmas.

In a new poll of 70 economists across Europe, two thirds predicted a rate cut by December and 11 said it would happen on Thursday.

Seven of the economists said the bank would wait until next year and 16 said they believed that it would not cut rates.

Some ECB governing council members wanted to cut rates last month, while others think they can stay at 1.5pc for now.

The ECB meeting will be the first chaired by Mr Draghi, who faces a headache over the Eurozone as Greece is to hold a referendum on the latest debt deal.

The deal aims to seek 50pc losses for private holders of Greek bonds and provide ¤100bn in new rescue loans.