The European Central Bank is widely expected to cut interest rates by 0.25% later today.
The development follows a significant drop in inflation across countries which use the euro.
An announcement is expected from the ECB early this afternoon.
Last month, inflation in the eurozone fell back to 2.2% which is close to the ECB’s target rate of 2%.
In June, the bank reduced rates for the first time since the inflation crisis with a 0.25% cut.
It is widely expected to do the same again today.
That would see rates drop from 3.75% to 3.5%.
However, there will be a double benefit for tracker mortgage customers.
The bank announced earlier this year a technical adjustment to rates to which are used by banks to price tracker mortgages which will result in a 0.35% cut this month.
Combined with the expected announcement this lunchtime it means those homeowners would see rates fall by 0.6% this month.
A fall in costs for borrowers usually means that, over time, returns for savers will drop too.
Recent figures show Irish household savings ratios have risen sharply this year and are now estimated at €150 billion.
Variable mortgage holders may not see a benefit because banks did not pass on all of the ECB’s increases when rates were rising, so these customers will not benefit from decreases.
Separately, a large number of customers are coming off low price fixed rate mortgages this year.
Those customers will find that home loans available on the market now are much more expensive.
Article Source – European Central Bank expected to further cut interest rates – RTE
