Variable Rate Homeowners Could See Relief From High Payments
According to a report in the Independent, homeowners may be set to receive three further interest rate cuts besides the one already given.
However according to one Bank of Ireland billionaire investor, it is a possibility that customers with variable rate home loans at BoI may not benefit from the series of ECB rate cuts.
Analysts had been expecting the Eurozone loan rate cut during December with two more following in January and February or March.
Danske Bank economists recently said the ECB rate would most likely fall from 1.25 percent to .5 percent.
With the four cuts, any €200,000 tracker mortgage would potentially see their payments drop by about €120 a month. Thus, over a 12-month period, persons with this kind of mortgage could be €1,440 better off.
Danske Bank, which owns National Irish Bank, said it was highly probable that the ECB would continue cutting rates to battle the inadequate growth in the Eurozone; in an attempt to enclose the sovereign-debt catastrophe.
The continued ECB rate cuts are likely to reignite the argument over banks failing to reduce the variable rates. However, Wilbur Ross, Bank of Ireland billionaire investor, defended the decision by the bank to resist the government efforts to influence it to reduce the variable mortgage rate.
Ross is reported to have said that for the funding environment to become normal, the Bank of Ireland needed to pass the ECB interest rate cuts on to its variable rate mortgage customers.
Ross said the lender had high funding costs, which made it very hard to pass on the rate cut. Wilbur Ross currently owns 9 percent of the bank.
Richie Boucher, Bank of Ireland boss, left a meeting last week with Tanaiste Eamon Gilmore and Taoiseach Enda Kenny after he was asked to pass on the ECB’s rate cut to the variable rate customers.
Bank of Ireland isn’t the only bank balking at the government’s attempts. Ulster Bank is also balking at its efforts to pass on the ECB’s cut to all variable rate customers. The variable rate for Ulster Bank if 4.95 percent; Bank of Ireland’s is 3.99 percent.
As it stands, the government has a 15 percent stake in the Bank of Ireland but none in Ulster Bank.
Article by Loans Ireland.
Photo by Steve-H
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