Good news for mortgage holders: Rates to stay low as the eurozone flounders
Slowdown: Tracker and standard variable loan-holders to benefit
Brexit woes: No deal will pitch Britain into long-lasting recession
Hundreds of thousands of mortgage-holders, as well as small businesses, are set for a reprieve on anticipated higher repayments.
A slow-down in the economies of countries in the eurozone means an interest rate rise next year is now less likely.
Adding to the economic concerns, a no-deal Brexit would be likely to tip Britain into a recession that could last as long as the downturn that followed the global financial crisis, ratings agency Standard & Poor’s has warned.
That’s bad news for Ireland, a key trading partner.
The European Central Bank (ECB) has signalled September 2019 as the likely start of rate increases.
Raising rates would be a signal of strength for the economy, but would hit borrowers here in the pocket.
The more than 300,000 Irish households with a tracker mortgage are among those who benefit most from the current low rates.
Their mortgage rate can be increased when the official ECB rate goes up, so the longer it is delayed the better for home-owners. Borrowers with a standard variable rate loan are also at risk of an increase, if rates go up.
The eurozone economy grew at its slowest pace in more than four years in the three months to the end of September, dragged down by near-stagnation in Italy and likely a weaker performance in Germany.
The euro area grew 1.7pc from a year earlier, according to the latest official data, far slower than expected.
Last year’s growth of 2.7pc had been the fastest expansion in a decade and sparked hopes Europe was set for a sustained upturn.
Now a slowdown casts doubt over whether the ECB can begin to normalise super-low interest rates at all before the next downturn.
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