Homeowners are expected to receive a boost today with the European Central Bank expected to cut its benchmark interest rate for the second time in as many months.
If the cut goes ahead, as has been widely anticipated, the average Irish tracker mortgage holder could be better off by more than €700 a year.
The bank could reduce its base rate of 1.25% by as much as half a percentage point at lunchtime in a move which would see holders of the average-sized tracker mortgage of €300,000 better off by about €60 a month.
If the bank implements a cut of 0.25%, as it did in November, the average tracker mortgage holder will see monthly savings of €30 in the new year. For every quarter of a point the bank lowers rates, the monthly cost of servicing a €100,000 mortgage declines by about €15.
Banks must pass on the cuts to tracker mortgage holders, but those on standard variable rate mortgages will be holding their breath to see whether their lenders pass on the cut. Two of the State’s largest lenders, Bank of Ireland and Ulster Bank, failed to pass on the last rate cut and AIB only did so after significant pressure was applied.
The expected rate cut comes just 24 hours after Bank of Ireland announced it has released a new mortgage fund of €1.5 billion in support of up to 10,000 homebuyers for 2012.
The bank said the new money would “act as a further support to the ministerial announcement in the budget to support first-time buyers in the market”.
