Germany: The European Central Bank cut interest rates again today as euro zone inflation eased and economic growth slowed, but gave little indication of its next step.
The European Central Bank (ECB) cut its deposit facility rate by 0.25%, bringing immediate relief to tracker mortgage customers and returning to a new chapter of rate cuts.
Tracker customers have been feeling the brunt of the high interest rate situation for the past two years, but mortgage customers will benefit from the ECB's latest monetary policy decision in addition to the 0.25% interest rate cut in June and a scheduled one-off move later.
"Tracker customers are going to see a very welcome gain in September," Tracker customers have felt the shock of higher interest rates over the past two years, and mortgage customers can take comfort when the European Central Bank (ECB) cuts rates.
Locally, consumer price inflation fell below 2 percent for the first time in three years, according to data from the Central Statistics Office. Meanwhile, in the April-June period, Irish households saved 12.7% of their income - down slightly from 14.6% in the first three months of the year, which the Central Statistics Office (CSO) noted was "unusually high". The slight decline came before the ECB announced their first interest rate cut, although affordability should improve as inflation and rates fall. According to the CSO, revenue fell slightly in the quarter, while consumption rose - up €2bn to €38bn compared to the same period last year. This results in a lower saving rate.
On September 18, tracker mortgage customers could see another 0.35% drop as the European regulator deploys its various rates, which will result in a further reduction in repayments each month. The average Tracker customer with a mortgage of around €250,000 would see a €120 reduction in monthly repayments due to the 0.85% reduction in rates.
The 179,000 customers with tracker mortgages have approximately €15 billion in arrears and represent 25% of the mortgage market. The ECB began raising rates in July 2022 in an effort to curb inflation, announcing the first cut in almost two years in June. At its meeting in July, the ECB paused rate cuts due to an unexpected rise in inflation. However, the pace of inflation in the eurozone slowed to 2.2% in August, above the regulator's target of 2%, fueling speculation among analysts that it will cut rates again at its September meeting.
However, ECB President Christine Lagarde remained cautious about further rate cuts, stating that the direction of interest rates is "very clear" and that rates will decrease over time, but the regulator is not committed to a "predetermined schedule in terms of order or magnitude". ”.reports indicate.
Banks are not quick to offer rate cuts to fixed and variable rate customers as the increase is slower to pass through. Irish mortgage rates have remained largely stable this year, after some mortgage rate falls in early 2024. Banking customers will benefit from new entrants to the mortgage market, including Bankinter and Revolut, who are already among the three main banks in the Republic offering attractive rates.
.jpg)
