ECB interest rate reduction expected today

Mortgage holders are expecting that Super Mario will announce an ECB interest rate reduction today of at least 0.25%.  A reduction of  Euro 104.17 interest per month (Euro 1,250 p.a) on a Euro 500,000 mortgage would be very welcome, especially now that we have had a chance to appreciate how Budget 2011 will impact on our income and expenditures. Some people are expecting a full 0.50% cut, but most seem to think that will be something to look forward to for early 2012.  Of course, only tracker rate mortgages are guaranteed to fully benefit from any rate reduction, although it seems likely that “government sponsored” AIB and Permanent TSB will be encouraged to pass on any reduction.

Permanent TSB continues to charge variable rate customers very high rates in an attempt to subsidise losses on their tracker mortgages. If you are on such a variable rate, it may be worth closely examining your loan documentation including any letter you signed when the lender issued choices following the expiry of a fixed rate.  Did the lender warn you that a particular choice of rate might mean never having access to a tracker rate in the future? Let the games begin.

The Loan Arranger

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