THE European Central Bank (ECB) is expected to cut interest rates again tomorrow in what will be the seventh cut in seven months.
A cut of 0.25 percentage points is thought likely by economists in a move that would take the ECB's base rate to 1pc.
If that happens, a family on a €200,000 tracker mortgage will see their monthly repayments come down by another €25.
Since last September, this family will end up paying €365 a month less on their home loan, if the ECB cuts by 0.25 points tomorrow.
Assuming this latest cut goes through, the ECB will have cut its main rate by 3.25 percentage points in seven stages since October.
But this may be the last cut as several ECB governors have indicated that 1pc is as low as they are prepared to go.
KBC Bank economist Austin Huhes said he does not expect eurozone rates to go below 1pc, but expects rates to stay at that level for most of next year.
However, Friends First economist Jim Power said recently he expects interest rates could be cut again in the summer.
Central Bank governor John Hurley indicated last week that the ECB members, meeting tomorrow, would decide to cut interest rates.
Mr Hurley, who is a member of the ECB's governing council, said any further rate reduction would be implemented in a "very measured way". Mr Hurley said: "There has been a cumulative reduction of 300 basis points in the key policy rate and, while the Governing Council is never pre-committed, I cannot exclude the possibility that the council may, in a very measured way, further reduce the main policy rate."
In addition to lowering the bank's benchmark lending rate, analysts think the ECB will extend the length of its unlimited loans to banks from six months to one year.
The cut in eurozone interest rates will benefit those on tracker rates, where banks are contractually committed to passing on rate cuts, and may also benefit those on variable rates.
Lenders do not have to pass on rate cuts to those on variable mortgages, but most have passed on the recent cuts.
KBC Homeloans (IIB Bank) did not pass on the April cut to variable-rate customers, while First Active and Ulster Bank only passed on half of the March cut. Permanent TSB has warned in the past that it will not pass on cuts when rates get very low. Fixed-rate mortgage holders do not benefit from ECB rate cuts.
Meanwhile, a spokeswoman for the Financial Regulator has confirmed that the watchdog has written to mortgage lenders warning them that the mechanism they are using to calculate breakage fees for those who want to get out of fixed rates must reflect the costs to the institution.
Some homeowners have been quoted as much as €20,000 to break out of fixed rates.
- IRISH INDEPENDENT, Charlie Weston