Euro zone interest rates were cut from 0.25 per cent to 0.15 per cent today in a bid to revive the continent’s moribund economy and stave off the threat of deflation.
The news will be a welcome boost for those on tracker mortgages, who will automatically benefit from reduced loan repayments.
The European Central Bank also cut the overnight deposit rate for lenders that hold money with it from zero to -0.1 per cent – effectively penalising them for hoarding cash and pushing them to lend.
Nearly 400,0000 people in Ireland, accounting for some 60 per cent of the total home loan market, are on tracker mortgages and will stand to gain from the move by the ECB today.
The monthly cost of servicing a €100,000 tracker mortgage will fall by about €6, so the average tracker mortgage holder with an outstanding loan of €300,000 will see monthly repayments fall by €18 .
It is the sixth ECB rate reduction in the last two-and-a-half years and those with a tracker mortgage of €300,000 will pay about €243 a month less than they were paying in the autumn of 2011, an annual saving of €2,916.