Homeowners could be set for an early New Year boost with the European Central Bank expected to cut mortgage interest rates for the third consecutive month when it meets again next week.
The prediction comes after it was revealed yesterday that Euro zone inflation dropped below 3% for the first time in three months in December, kicking off a slowdown that economists expect will revive deflation fears and tempt the ECB to cute rates below 1% for the first time in its history.
While some predict, it could be February or March before another rate cut is made, it could come as soon as next Thursday, when the ECB meets for the first time in 2012.
Homeowners on a €200,000 tracker mortgage – who automatically benefit from any ECB rate cuts – could save an additional €30 on their repayments were the rate to be reduced again. That would bring their overall savings since last November to €90 a month.
A number of institutions failed to pass on the ECB rate cuts to their variable rate mortgage holders before Christmas but another cut would add to the growing calls for them to pass on the savings to their customers.