Blow for borrowers as ECB ‘to limit number of rate cuts this year’

An ECB rate cut is expected next month, but in a blow to borrowers there could then be a break before another cut.

Yannis Stournaras, of the ECB governing council, said the Bank of Greece reviewed Eurostat’s recent inflation and growth data, and “we now consider three rate cuts in 2024 as the more likely scenario”.

The ECB appears ready to cut rates when policymakers meet next month.

It had been expected there would be a cut of 0.25 percentage points in the ECB refinancing rate, which is 4.5pc.

It was then expected there could be another three additional reductions by the end of the year. But now there may be only three cuts this year.

Every cut of 0.25 points will knock €15 off the monthly repayments on a typical tracker. Most of those on trackers still owe around €100,000 and have around 15 years left to pay.

There are around 180,000 homeowners on tracker mortgage rates who would benefit directly from any ECB cuts.

Also likely to benefit are people trapped with vulture funds that will not let them fix their mortgage rate, and 70,000 borrowers who are coming off fixed rates this year.

Rents in existing tenancies are now rising at three times the permitted level under rental cap rules

There have already been mortgage rate cuts from AIB, and its subsidiaries Haven and EBS, for those who qualify for a green rate.

AIB, EBS and Haven also upped the cash incentive for switchers from €2,000 to €3,000.

And Bank of Ireland has introduced a range of discounts on its fixed rates for those with BER of any kind, not just B3 or better.

It also introduced a new flat variable rate rather than a range of variable rates.

PTSB has cut some of its fixed rates.

Avant Money is reducing its mortgage rates by up to 0.45 percentage points.

And there will be a “technical” adjustment to its rates in September set to benefit tracker holders as it will see the ECB refinancing rate reduced by 0.35 percentage points.

Mortgage broker Michael Dowling, of Dowling Financial, in Dublin, said the ECB is still expected to reduce rates from June with a decrease of 0.25 percentage points being applied.

This will be good news for the 179,000 tracker-mortgage customers with €15.4bn in debt outstanding, he said.

“The average balance outstanding is €133,000, so the reduction is worth €16 a month.”

Melanie Baker, senior economist at Royal London Asset Management, said: “ECB speakers have continued to signal a rate cut in June, but the picture beyond that point looks murkier and remains data dependent.”