ECB will not cut its base interest rate following yesterday’s council meeting
The European Central Bank’s governing council decided yesterday to not make a fresh cut to the interest rate despite rumours to the contrary. Many experts in the field were predicting that the ECB would further reduce the already record-low rate of 0.75% within the first quarter of 2013. The announcement will be disappointing for Ireland’s 375,000 property owners who are on tracker mortgages.
This is because anyone with a tracker mortgage has the rate cut automatically passed on to them, thus benefiting straight away with lower monthly repayments. However, the ECB’s president, Mario Draghi, stated that there isn’t a need for another cut. Indicators pointing towards a recovery in the Eurozone economy as well as ongoing stabilisation of the bond markets are cited as the main reasons for keeping the rates unchanged.
Mortgage experts say that cut may not be on the cards soon, but the prospect of a future reduction of the interest rate remains a possibility, albeit unlikely. The most recent cut was in July last year when the interest rate was brought down to just 0.75%, the lowest it has ever been. And those on tracker mortgages have benefited from every cut made. For every 0.25% taken off the ECB’s interest rate, a mortgage holder on tracker terms pays €15 less a month per €100,000 borrowed.