ONE OF EUROPE’S most prominent banks, with operations in Ireland, has predicted that the European Central Bank will cut its main interest rates next week – in a move that will benefit tens of thousands of mortgage holders.
Danske Bank, which owns National Irish Bank, has said a fall in the level of manufacturing output throughout Europe could mean the ECB will opt to stimulate lending by cutting its main rate by 0.25 per cent.
The next meeting of the bank’s governing council – being held in Frankfurt next Wednesday – could be the forum at which Danske believes the cut could be imposed.
That would be good news not only for manufacturers and industry, who may be given slightly cheaper access to bank loans, but also to mortgage holders – particularly those on tracker mortgages.
Any cut to the ECB’s rates would take almost immediate effect on their mortgages, at a time when Central Bank figures show the number of households falling into arrears as being continually on the rise.
The effect of a 0.25 per cent cut would be to reduce the monthly payment by €13.48 for every €100,000 outstanding on a 30-year mortgage (though this amount fluctuates depending on the value and term of the loan).
The cut would be the third since Mario Draghi took over as the ECB’s president in November, though the first of this year; the Italian oversaw cuts from 1.5 per cent to 1.0 per cent in his first two months in charge, but has not budged since.