Mortgage holders who have been “hard hit” can expect a “significant” drop in interest rates this month, according to a leading expert.
The ECB lowered rates by 0.25% in June, their first cut since 2019, which could save those on tracker mortgages up to €400 per year.
Contracting Plus Managing Director Margaret Barrett believes further savings will be announced later this month when the ECB meets again on September 12th.
She told The Pat Kenny Show today that now is a good time to consider switching mortgages.
“All indications are pointing to the ECB reducing interest rates by 0.25% and being cautious, I think it will stay around 2.25%,” said Ms Barrett.
“The immediate customers who will feel the knock-on effect are our tracker mortgage holders.
“They’ve been hard hit and have seen rates increase by 4.5% over the last two years.”
Good news
While Ms Barrett expects an immediate 0.25% reduction for those on tracker mortgages later this month, she also noted the potential for further good news.
“They’re also likely to see an additional 0.35% reduction because of an anticipated price drop due to the spread between the financing rate and the deposit rate in the European Central Bank,” she said.
“They’re hopefully going to see a total reduction of 0.6%, which is significant.”
“For example, a customer with a €150,000 mortgage over a remaining term of 15 years could see their monthly repayment reduced by €44, which is absolutely significant.”
A man holding a bunch of keys. Image: Mark Richardson / Alamy Stock PhotoMs Barrett said the mortgage market is “not bad” at the moment for those considering shopping around.
“Stats came out earlier this week showing the average mortgage interest rate in Ireland is currently 4.1%,” she said.
“That doesn't make us the cheapest in Europe; we're still the sixth highest in European interest rates.
“But we still have rates available starting at 3.45%, which is a green mortgage fixed for four years and we have a variable interest rate of 3.75%.
“Interest rates have reduced from that 4.1% - not so long ago it was 4.7%.”
Green mortgage
She advised a listener to the show who is considering switching to a 3.55% green mortgage rate to hold off for a few months.
“It would only be a brief hold, just to see how the lenders will react,” said Ms Barrett.
“As in, hold off until October or November just to see how the lenders will react to the September announcement.
“I don’t think we’re going to see an immediate reduction in interest rates; I think they’ve probably priced this half percent into their rates.
“If they haven’t moved by November, the answer would be to switch.”
Ms Barrett added that those purchasing new builds should have access to the lower green mortgage rate of 3.45%.
