Tracker mortgage holders interest rates to drop by .35%!

Irish tracker mortgage holders are set to get a bonus reduction of 0.35 of a percentage point in the interest rate on their loans this autumn, due to a rethink by the European Central Bank (ECB) rates.

Tracker mortgage rates are priced off an ECB interest rate, the refinancing rate, which has recently been half a point higher and now stands at 4.5 per cent. This means that currently, the interest rates on tracker loans are typically in the 5.6 per cent to 6 per cent range. There are 180,000 tracker mortgage holders in Ireland.

Last week. the ECB has announced that it will cut refinancing rate from 0.5 of a percentage point now to 0.15 of a point “as of September 2024″. This means a repayment reduction for most tracker holders as contract terms generally say that their borrowing rates vary automatically with the refinancing rate. The first reduction in ECB rates is expected in the months ahead, probably in June. The reduction of the ECB rates promises to be followed by an additional reduction for these mortgage holders in the autumn.

On its own, the reduction in repayments is likely to be in the €15 to 20 a month range on a €100,000 loan, due to the 0.35 of a point fall. However, the total fall in repayments will be well ahead of this as speculation grows that the ECB will cut rates, perhaps three or four times, later this year. Tracker rates could be one percentage point lower this winter than they are now, a saving of around €60 a month on a typical tracker with €100,000 left on their mortgage and with the addition of the “bonus” cut gains could even be ahead of this.

For more information and how you can avail of the best interest rates on the market, call us on 071 9194194 or email mortgages@obg.ie