ECB Cut Rates by 0.5% bringing the ECB base rate to 3.75%

The ECB rate change has given many of us a pleasant surprise, the ECB has cut rates by 0.5% giving a new base rate of 3.75%. For many of us that means new lower mortgage repayments (if you are on a tracker mortgage) for people on variables you will have to adopt a ‘wait and see’ approach because banks are not obliged to pass on the rate change. The pressure is coming down at least for now.

[Take note: this is not a ‘positive’ rate cut, it can have a positive result but the motivation behind it raises questions about the solvency and losses of major institutions as well as the threat of deflation.]

So, why would a bank opt to not pass on a rate reduction? Simply put, the income from many tracker mortgages does not cover the cost of funds that banks run on and therefore it would not make commercial sense to give people …

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