Hope for home owners with rumours of ECB rate cut
CASH-STRAPPED home owners could receive a boost with reports that the European Central Bank may cut interest rates.
Rate hikes, which hit those with tracker and variable rate mortgages, may be reversed.
The chaos on the international markets over the past few weeks is expected to spur the European Central Bank (ECB) into radical action.
The ECB is now understood to be considering moves to cancel the interest rate hikes.
The two rate rises this year -- affecting almost 600,000 Irish householders -- added €60 a month to the cost of servicing a €200,000 mortgage.
The ECB hiked its main rate by 0.25pc in April, and again by the same percentage last month to take the eurozone lending rate to 1.5pc.
Every 0.25pc rise in rates adds around €15 to the monthly repayments on every €100,000 borrowed.
Employers' group Ibec predicted further drops as oil prices continue to fall.
"This is good news for Irish consumers," economist Fergal O'Brien said.
"At the very least the ECB will dismiss any notions of further interest rate increases and recent hikes could even be reversed."
But despite the flicker of hope for hard-pressed home owners, Bank of Ireland poured cold water on the good news.
Chief executive of Bank of Ireland Richie Boucher earlier revealed that the lender would shortly be passing on this year's two ECB interest rate increases to its customers as its deposit costs took their toll.
He said the bank had absorbed the two recent interest rate increases from the ECB but signalled the higher cost of deposits meant the interest rate on loans had to be increased.
If Bank of Ireland passes on the full 0.5pc ECB rate hike it will cost hard-pressed home owners €30 for every €100,000 borrowed.
New figures released yesterday outlined that Irish customers are already paying more in housing and rent costs than last year.
Housing, water, electricity and gas jumped by 10pc over the last year and the cost of insurance also rose by 14.5pc, according to the CSO.
Mortgage lending is currently at a 40-year low.