THE EUROPEAN CENTRAL Bank looks set to cut interest rates in June in a move that will ease the repayment burden on tracker mortgage holders.
Reuters reported today that the move is “more or less a done deal”, and it will be pushed through along with a package of measures aimed at boosting lending to Small and Medium Size enterprises.
Personal finance expert John Lowe of moneydoctor.ie said that the rate cut is likely to be in the order of 0.15 per cent, but said that overall the impact would not have a huge impact.
“It’s insignificant in some respects, but it’ll still be a few bob off their mortgage repayments.”
While the rate cut will automatically be passed on to holders of tracker mortgages, Lowe said that those on standard variable rate mortgages are unlikely to have the cut passed on by their banks.
“I’m quite certain that they won’t pass it on.”
The rate cut was first signalled by ECB president Mario Draghi at his monthly press conference last week.
He said: “The Governing council is comfortable with acting next time but we want to see the staff projections that will come out in early June.”
While not overtly explosive, Draghi’s comments, which were versed in the conservative language favoured by central bankers, were welcomed by the markets after several months of inaction.
The move is primarily designed to try and encourage inflation in the euro zone, which is battling sluggish levels of price growth and the spectre of deflation.
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