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THE EUROPEAN CENTRAL Bank has cut its key interest rate by 25 basis points to a record low of 0.25 per cent this afternoon.
The news from the Frankfurt is a pre-Christmas boost to some 375,000 people who are on tracker mortgages that are tied to the ECB’s main interest rate for the eurozone.
The cut is the first in six months when ECB president Mario Draghi announced a similar 25 basis points cut to 0.75 per cent and today’s move marks his fifth since he took office as president in November 2011.
The cut is seen as a reaction to falling inflation and the latest forecasts that the eurozone economy will expand more slowly next year than previously expected.
The ECB’s main task is to keep the cost of living relatively unchanged meaning an ‘ideal’ inflation rate should be two per cent.
In October, inflation in the euro zone declined to an annual rate of 0.7 per cent.
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My mortgage interest rate will now be 1.35% (1.1% margin over ECB).
Deee-lighted!
I love you tracker mortgage
I don,t know what a tracker mortgage is…..but I am delighted I have one.
My love of my tracker is wrong. It’s Mississippi type, cousins getting it on wrong. And yet. Yet it is real and undeniable and enduring.
u have one and don’t know what it is??
I didn’t know what it was when I signed up to it either. It was that or no mortgage. A mistake on the banks part in retrospect.
Happy Christmas from the ECB! :)
iT WASN’T A MISTAKE kEVIN ; IT WAS THE BEST WAY FOR THEM TO LEND YOU THE LARGEST CAPITAL BY KEEPING REPAYMENTS TO THE MINIMUM; THE MISTAKE THE BANKS MADE WAS THINKING THAT THE E.C.B. RATE WOULD GO UP NOT DOWN …
SORRY FOR CAPS !
I love my tracker…. I’d marry it except the government say I cant.
Wheres my referendum! :-D
pesky governemt Joey ; only serving those with love for another , no room for self love at all at all !
I did even better… got a loan to value valuation done during the boom based on that ulster bank cut my base rate from 1.1 to 0.85… so my new rate is (ecb) 0.25 + (banks base rate) 0.85 which is 1.1 happy days :-D
I’m delighted for people on trackers , the less money the banks get the better plus they void all other mortgages in A.I.B. and P.T.S.B. because of discrimination.
What are you on about..
Few extra bob i mo phóca. Woohoo!
Only problem is we’re close to running out of these pleasant surprises now….
Me too. Yes!!
This better be passed on to all customers!
Good to see the rates drop but where is this mystical low inflation they speak of…not in travel..rail…electric..gas..and whatever your having yourself.
Spot on Dermot.
Sorry Sir We can only lend you €50K on a 30 year fixed or capped rate.
But we can lend you €1.6 million on a
tracker
interest only
low introductory
10 x income
100%+
rate
and we don’t even need a P60 or pay slips as we now allow you to certify your own income.
Quick sign here!
The end of the year is coming fast!
I need the commission check to clear for Christmas Shopping.
(Disclaimer: If it all goes wrong we will steal half of your income at source to bail ourselves out
and will torture you for the rest of your very short life)
10′s of thousands of us are unknowingly entitled to be on trackers!!!
Worth a read.
http://www.askaboutmoney.com/showthread.php?t=176743
http://www.askaboutmoney.com/showthread.php?t=176883
Could mean an extra €100K+
correct gathering except they didn’t count on the Iirsh constitution !
So does that mean our “pillar banks” will increase non tracker mortgages again to cover their tracker mortgage losses?
Afraid it does but at least I think they will wait till after Christmas.
Somebody has to pay the difference! Trackers rock!
Oh, the bitterness of backing the wrong horse….
uNFORTUNATELY FOR THE STatE OWNED BANKS THEY CANNOT RAISE THE OTHER RATES WITHOUT BREACHING EQUALITY PRINCIPLES ………..
They know this and that is why they keep so close to politicians !
Kevin whom are you addressing?
Same..have a variable rate4.5%..can anyone give me an average variable rate?
Why cant they be capped at a max over tracker..hard enough paying my own mortage without picking up the slack on trackers.
They increase them even though they can borrow at a much cheaper rate from the ECB now as well. So they are making a large saving there as well.
Norman- Who. “Who are you addressing?” Or “To whom was that addressed?” Since below you appointed yourself grammar commissioner, I thought I’d help you out.
Fine but you still didn’t address my question,well?
My fixed rate is up and I’m pondering the idea of fixing it again for another 3 to 4 years as I’m worried by taking the variable as I know full well the rate will go up. Decisions decisions
You can bet your bus Leonard they’ll put them up again… there was a day they would begrudgingly pass the cut to variable but this goverment hasn’t bothered to fight for it anymore…
AWESOME. Pretty soon my bank will be paying me for living in my house. Gotta love trackers….
Heard from a fella in the pub on Saturday that Mario Draghi has family living in Borrisokane word is the O’Draghi’s from borris have a once off self build and are currently struggling to pay the aul mortgage so Uncle Mario decided to pull a few strings at EU level and drop the rate. Fair play the O’Draghis.
Good news… coupled with falling oil prices this should help things to recover.
Falling oil prices you say??
Yup, €83 a barrel of oil a few weeks ago, slipped below €70 yesterday… you should notice a bit of a fall in road fuel prices in your area already unless the local station is taking advantage…
http://www.exchangerates.org.uk/commodities/live-oil-prices/OIL-EUR.html
Whoops, back up to €71 today… I guess the market gougers don’t like the new low interest rate… hopefully prices don’t rise much further.
I like the sound of that. My week has brightened up a bit
Falling oil prices could also be an indication of a lack of production demand. As economies recover, production demand increases and oil prices rise.
Alot of different factors play into it Scarr… but for the moment, let’s enjoy the little relief there is to high fuel costs!!!
Every silver lining has a cloud. :)
Exactly Scarr. However, a big game changer in the US is shale gas and the fact that in a few years they’ll become a net exporter of oil. So that’s going to have a serious impact on OPEC and their ability to manipulate oil prices, not to mention the fact that it’ll mean US interests in the middle east will decline. http://www.bloomberg.com/news/2012-02-29/u-s-was-net-oil-product-exporter-in-2011.html
Amen to that!
He means artificially suppressed oil prices.
New fracking technology means low oil prices are here for the next 20 or 30 years at least. It means countries have underestimated their oil reserves.
Happy days!!
Low inflationary pressures means low interest rates. So not all bad for indebted Europe, Japan and the USA!
Inflation is not all bad. If you owe a lot of money inflation helps erode the real debt.
People who took out large mortgages but now live in a. “low “
… inflation economy are feeling the pain and will be for a long time(comment posted too early above).
Now paying 1% interest. Let the good times roll!
Was thinking of ringing them to wipe it altogether?! I’m costing them money!
I have a 60 BP tracker with Ulster Bank. So my mortgage is now @ 0.85 interest.
Jackpot. Screw you Ulster bank.
Wow… the app went all glitchy there.
Didnt mean to congratualte you 5 times over!
That’s a lot of wondering you’re doing!
My rate is 0.5% over the ECB rate, so my rate is now 0.75%. And I do believe that that is, in fact, the lowest rate in the country…
Yes national irish bank. My tracker is .51 and the ecb new rate of .25
My new interest rate is .76 belive it or not. At the time they calculated it at 50% loan to value ratio.
It’s the great unspoken masse in Ireland, isn’t it? The large swathe of people effectively better off since the economic downturn thanks to Trackers.
well spotted kevin ; in state owned banks the failure to equalise the mortgages of the citizens is a breach of equality principles and the equalisation in european law , not that I as an irishman have to recognise european law ….
#my twin has a tracker I don’t so what do you do ; rob your twin ; this is where politicians think they have us by the balls ; they don’t.
Ah, Dermot. We disagree there. People who took a tracker rolled the dice and won. People who took the variable rolled it and lost. It’s a free country, so if you chose a variable and that went against you, it’s bad luck- but you made the call, I’m afraid.
I took a fixed rate and enjoy a very stable household budget… feck it if I am going to be at the whims of the markets, they don’t love me, I certainly don’t love them!!!
Ah but Kevin. Some could not afford the rates that a tracker required when they were available, so there was no dice to roll in effect.
@ Scarr. Tracker was always the cheapest option no? When my initial fixed rate expired just before the crash, the tracker was by far the cheapest option I had and that’s why I picked it.
your argument is correct prior to Bank bailout Kevin; the bank guarantee changed the rules because as a State-owned institution it cannot discriminate; Rent allowance is equalised so too should mortgages owned by the State.
Your argument holds for Bank of Ireland , Ulster bank etc. but not A.I.B. and P.T.S.B……
Furthermore neither state owned bank can be sold without referendum ; politicians and bankers know this as do all those who hold exploration licences ………why do you think bribery is such a part of Irish political life ?
Banks are not 100% state owned.
Good luck with that wishful thinking Dermot.
@ Mark when the fixed part of our mortgage ended the tracker was the more expensive option over a variable rate in 2008. We gambled on the tracker and fortunately won.
good luck with your head in the sand Colin !
The bad thing about having a Tracker mortgage is that the mortgagee probably bought at the height of the boom and probably paid over the odds for the house :)
Pete you’re wrong there is nothing bad about having a tracker, the negative equity might be a killer but not been at the mercy of the banks need for profit as variable rate customers are is a plus.
I’d rather have 250k on a tracker than 100k at 4.5%
Norman what he’s saying is that the time most people on trackers bought was coming towards the absolute peak of the housing bubble. Your mortgage is going well for you with the rates as they are but the chances are you have taken a significant hit on the house that you bought in capital terms. Obvioulsy I don’t mean you specifically but I think he means the general public.
Obviously it’s still better to be on a tracker mortgage in negative equity than a variable in negative equity which is pretty much as bad as it gets at the moment.
When tracker rates rise the banks will also put up their variable rates by the same percentage… in the 80′s variables were at 17 percent….
Can someone please explain to me how banks lose money on tracker mortgages? I thought the whole point was that the banks pay whatever the ECB rate is on their own borrowings, but the mortgage holders pay whatever the ECB rate is plus an extra percent or two on top of it. If that is the case would they not still be making money on whatever that interest rate they charge on top of the ECB rate is? Or, have our banks borrowed from private institutions which charge higher interest rates than the ECB rate?
Interbank lending rates are still high.
Though over the life of a mortgage, trackers will be profitable.
What happens is that when you borrow x amount from the bank, the bank does not borrow this x amount straight up so is not tied to the same scale.
The bank borrows on condition that it pays back a smaller portion of x amount every year for a set period.
So you are getting the benefit of borrowing when credit was cheap, and repaying on those cheap credit levels, the banks are now repaying on current levels where credit is far higher.
So banks are losing money on tracker mortgages as they speculated that rates would not rise drastically, unfortunately variable borrowers are now having to pay the difference.
Ok I get it now. Thanks guys.
Happy days. When my 5 year fixed rate was up in August, my contract said they had to offer me a tracker. They offered me 10 different variables, and then the small print mentioned the tracker, cut my repayments in half.
We’re only 25bps away from European QE so – only so long the Germans can hold out.
In reality we are already there. Interest rates have declined to rock bottom and yet Europe is still only barely growing with half of it in decline.
pushing on a string, they are getting desperate
Still in Negative Equity though aren’t y’all with your mortgages
No actually, my mortgage is less than my homes value, this latest cut reduces my monthly payment again but I try not to rub other people’s noses in it unlike some other commentators.
Don’t burst people’s bubble Dave. Let them enjoy their good news. Hail to the ‘tracker people’.
And anyone that has a tracker in dublin is extra lucky work house price rises…
Great news for some.
Make the most of it The money you have been paying for them is going to become worthless!
Feck… how?
A tin of baked beans is going to end up costing 6euro each – electric water costs will rise up
To use a typical example-
Your (excuse the generalisation) shoe box house bought for 300k and now worth 100k is worth far less than it was – but you will be able to afford the easy repayments.
You will probably find solace in the fact that people renting will also have to fork out rent and buy 6euro cans of beans. But isnt that how the property boom occured. Rising social mobility founded on people swapping houses but giving banks commission each time through loans?
You will by 2020 have probably done better to buy 1000 tins of baked beans assuming the best before date holds out.
And no more drugs for you today.
You will be on here crying that FG or FF or anyone else for that matter is to blame for your tracker .
Why didn’t somebody tell you interest rates were going to go up to 8 percent!
I’m sure you wait wait eagerly until that day ASN!
I love how the variable rate has gone throught the roof when thr ECB has gone through the floor. Next round of trackers anyone? House prices are rising so I give it 10 yrs.
and cue irish banks increasing mortgage interest rates and noonan,gilmore and kenny trot out to inform people that there is nothing they can do……
Now just.watch FG/Labour introduce a tax to negate any benefit that would have benefited the economy.
I be the banks don’t pass it in to us poor variable mortgage holders!
Money is too cheap. This next recession is going to hurt.
A lot.
Stupid stupid people. Low base rates fuel inflation. For every euro you save in mortgage payments you will lose more than double through the reduced value of your pensions, wages and houses. Banks are making 40 fold profits by borrowing essentially for less than inflation and lending at comparatively extortionate rates. THIS WILL NOT BENEFIT YOU!
We need a little inflation to wind out our debts. Unfortunately, inflation is falling which is why this was done. We need people spending more, saving less and generating jobs. Money sitting in the bank might be great for the individual but is terrible for an economy at risk of deflation.
Absolutely…
I have negative equity coming out my ass.
However we dont need to move, so for now its fine.
Hark at all the armchair economists. The world will still turn and the sun will still rise every day for a long time to come regardless of what the ECB does and people should remember that.
Yipppppeeee
Got to love the tracker, 0.85% interest on my mortgage, bring it on. Word is they’ll do to 0% in the new year
Isn’t now finally time Bank of Ireland reduced its standard variable rate they continually react with an increase or no change !
trackers are not the only borrowers in the Emerald Isle tax haven ;-) that need to buy Christmas presents !
have your say