HOMEOWNERS are in line for significant mortgage reductions when the European Central Bank (ECB) slashes interest rates by a further 0.5pc this week.
The predicted cut on Thursday -- the sixth consecutive drop since last summer -- will push interest rates down to a record low of 1pc.
It would reduce the repayments on a typical €300,000 mortgage by a further €80 a month, or a total saving of €550 in repayments since last September.
A sharper than expected fall-off in economic activity in the eurozone is set to force central bankers into the emergency cut on Thursday, Goodbody economist Dermot O'Leary said.
This would mean mortgage rates for borrowers with tracker and variable rate mortgages rates coming down to between 2pc and 3pc.
The ECB had been expected to wait until May before cutting rates for the sixth time since last summer.
However, Bank of Ireland chief economist Dan McLaughlin predicted there would be a cut "at its April 2 meeting. . . particularly as it coincides with the G20 meeting in London, where the emphasis will be on global policy action to kick-start credit growth and economic activity".
A cut of 0.5pc will put money in the pockets of those with trackers, and benefit most people with variable rate mortgages.
Most tracker rates are set at between 0.5pc and 1.75pc above the ECB rate. So if ECB rates fall to 1pc, then someone with a tracker set at 1pc above ECB rates would see their mortgage rate fall to just 2pc.
For someone with a €100,000 tracker mortgage over 30 years, monthly repayments will fall by €25 if this week's rate cut goes ahead.
Since last summer, the monthly repayments will have come down by €182, according to calculations by the Irish Mortgage Corporation.
Variable rate mortgages tend to be around 1.75pc above the ECB rate. So a person with a €100,000 mortgage will save €27 on monthly repayments if the ECB drops its rates. This mortgage holder will have saved €191 since last summer.
However, Frank Conway of Irish Mortgage Corporation warned there was a real risk some lenders would not pass on the next ECB rate reduction.
- IRISH INDEPENDENT, Charlie Weston: Personal Finance Editor