ECB president Mario Draghi has now presided over two interest rate cuts in as many months. Michael Probst/AP

Mortgage relief as ECB cuts rates by 0.25 per cent

Good news for mortgage holders – the ECB has cut its main interest rate by 0.25 per cent, effective from December 14.

THE EUROPEAN CENTRAL BANK has cut its main interest rate by 0.25 per cent at its monthly meeting in Frankfurt today.

The cut is the second such cut in successive months – and the second to be overseen by its new President, Mario Draghi, since he took over at the bank six weeks ago. The cut will take effect from December 14.

The interest rate on marginal lending and deposits has also been cut, by 0.25 per cent, with effect from the same date, in a bid to boost liquidity in the European banking system.

The cut had been widely expected, with some observers predicting a cut of up to 0.5 per cent as the bank tries to free up more cash and improve liquidity in the eurozone’s banking sector.

The move will be a boost to mortgage holders, with tracker mortgage rates coming down with immediate effect once the rate kicks in, while banks will also be pressured to cut the rates for other variable rate mortgages.

Permanent TSB has already pledged to reduce the interest rate on its variable rate mortgages.

This morning in the Dáil, Tánaiste Eamon Gilmore said the government would act “decisively, forcefully” to ensure that banks pass on the reduced rate to their variable rate customers.

The similar 0.25 per cent cut last month prompted pressure on other main banks to reduce their rates accordingly, with AIB eventually agreeing to a cut after meetings with government officials.

Explainer: Changes to mortgage interest relief

Bank of Ireland to make €1.5 billion available for mortgages

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