What the changing ECB rates mean for your mortgage

For the second month in a row, and the third time since June, the European Central Bank (ECB) has cut its key rate by 0.25%. Furthermore, financial analysts predict the ECB will continue to reduce interest rates to 2% or even less before next summer.

But what exactly does this mean for mortgage holders? How will it impact those of us paying fixed rate, variable or tracker mortgages? Or indeed prospective first-time buyers anxiously watching the market they are hoping to enter.

Eoin Clarke, the commercial director of Switcher.ie, the website that helps consumers save money, explains what the ECB’s behaviour means for Irish homeowners.

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"The easing of annual inflation across the Eurozone has prompted another round of ECB interest rate cuts. The latest ECB rate reduction, the third this year, could be good news for homeowners and first time buyers”.

Tracker and variable mortgages

“Those with tracker mortgages will see their mortgage rates drop automatically, but even those with a variable rate mortgage could see a cut on the cards. Although it's not set in stone, variable rate mortgages tend to rise or fall in tandem with the ECB rate. However, it is hard to predict with any certainty what individual lenders will do”.

“Mortgage holders have already seen interest rate drops from several lenders in recent months, so other lenders may follow suit, especially if the predicted December ECB rate cut kicks in”.

Fixed rate mortgages

“Homeowners with a fixed rate mortgage won't feel any impact whilst locked into their interest rate, but if they're coming to the end of their mortgage term, it's worth comparing mortgage rates and switching to another lender if they're offering better rates.

Mortgage switchers

“Whether you're a first-time buyer, home mover, or switcher, the key to securing the best mortgage is understanding your starting point - for instance, your property price and the loan-to-value (LTV) - and doing your research in advance. Once you've narrowed down your choice, take the time to review the overall cost of each loan, including fees.

“A mortgage broker can help you navigate the mortgage market and application process if you're just starting out or need advice”.

You can compare current mortgage rates on offer at Switcher.ie