The European Central Bank (ECB) has cut interest rates for the first time in five years, providing much-needed relief to mortgage holders. The deposit interest rate has been reduced by 0.25%, from 4% to 3.75%. This move comes after a series of rate hikes aimed at controlling inflation, with the ECB raising rates ten times over the last 23 months.
For those looking to buy a home in Ireland, this is welcome news. The ECB has also cut the main refinancing operations interest rate, which affects mortgage rates, from 4.5% to 4.25%. As a result, mortgage repayments will decrease, especially benefiting the 186,000 people in Ireland with tracker mortgages. These mortgages are directly influenced by the ECB’s rates, so the reduction will lower their monthly payments.
The ECB has not provided any guidance on future rate changes, leaving open the possibility of further adjustments. For now, however, the rate cut offers a financial reprieve for many Irish homeowners after years of increasing mortgage costs.