The European Central Bank has announced a cut in its key interest rates by a quarter of a per cent.
It marks the fourth such reduction in 2024.
The ECB said inflation in the Eurozone is coming close to its 2 per cent target and has indicated further rate cuts are possible in coming months, as concerns grow over the French and German economies.
Darragh Cassidy, Head of Communications for Bonkers.ie, said:
“As usual, tracker customers will benefit almost immediately from the cut. For someone with €200,000 remaining on their mortgage over 10 or 15 years, they’ll save around another €25 a month on their repayments.
“And when you take the ECB’s three previous cuts this year into account, as well as the ‘bonus’ reduction in September, the average tracker customer has seen their repayments fall by well over €100 a month at this stage.
“Also benefiting will be the thousands of so-called mortgage prisoners whose loans were sold to vulture funds and some of whom are still paying extortionate variable rates as high as 7% or more right now.”
However, Mr Cassidy also pointed out that falling interest rates are not good news for everyone.
“Irish households currently have almost €160 billion resting on deposit. But the majority of the money is still in accounts that pay little to no interest. So I’d really encourage people with savings to lock into the higher rates while they’re still available.
“And if the ECB continues to slash borrowing costs into next year, as is widely expected, there will be concerns about how appropriate this will be for the Irish economy. The Irish economy is performing much better than the rest of the Eurozone and arguably doesn’t need lower interest rates. At least not right now.
“So this could lead to an uptick in inflation. Cheaper borrowing costs are also likely to add further fuel to an already overheating property market, which is really the last thing that we need.”
