Euro Debt Crisis ‘Could Bring Mortgage Interest Rates To Historic Lows’
Europe’s mortgage rates could be on path to hit a historic low, as the region does what it can to save the Euro during the Euro debt crisis.
And, despite the recent 0.25 percent rate reduction, and the ECB giving banks an unlimited amount of cash for three years so European lending establishment would stay afloat, another interest rate cut is expected to occur in January.
Despite the deepening financial crisis throughout Europe, Taoiseach Enda Kenny is trying to get its bailout debt decreased in return for an agreement to have a vote that would present more centralized powers to Europe. These powers are necessary to impose greater financial punishment on countries like maintaining their borrowing within the specified and agreed upon limits.
Kenny, in a letter to Herman Van Rompuy, EU council president, said he wanted to postpone some of the debts’ repayment for close to 30 years.
Rather, he wants a repayment agreement on some of the €63bn the state borrowed to fund the troubled banks. Some of the borrowed funds fell under the EU-IMF bailout with others on the bond markets.
Kenny said he wants a new EU rescue fund set up to take control of the debts, possibly getting a better deal on repayment.
This deal would ensure that voters like any referendums they are being informed about.
Due to the hardened stance by both small and large states, the possibility of a successful outcome is looking more and more distant.
Tanaiste Eamon Gilmore finally agreed that the Government would need to be ready to have a vote on a new EU treaty.
Gilmore said if a new EU treaty is what must be done to save the currency and be able to borrow on the financial markets once again, then it should be up to the Irish people to make the choice.
Despite the fact that ECB president Mario Draghi sliced rates and gave cash to European banks, he stifled rumors that it would purchase government debt. Markets had expected ECB would offer to purchase unlimited government debt, with this being an important step. Upon his comments, world markets dropped.
For the second time in two months, the ECB sliced its key interest rate to one percent. The move will help more than 400,000 people on tracker mortgages before Christmas, saving them nearly €40 a month on a €250,000 home/business mortgage. A similar rate cut occurring in January would bring the interest rate down to an historic 0.75 percent.
Draghi said a good deal of the 200,000 variable rate homeowners will not see the benefit. However, banks are using the cut decrease the cost of credit. Ulster Bank said it would not pass it on, making it the second time they’ve refused to pass the ECB cut. The Bank of Ireland will only pass on some of it. KBC Bank said its variable rates are constantly being looked over. However, the majority of banks are passing the cut on.
Image © Bachmont