Belfast Telegraph

Economists predict no change to ECB rates

By Charlie Weston

The European Central Bank (ECB) will keep interest rates at a record low of 1% for at least another year, a survey of 79 economists shows.

Any rise in rates will not be until the end of 2010, with a 0.25% rise likely, the survey by economists across Europe conducted by Reuters adds.

The ECB has held its key rate at 1% for 17 months now. Some 400,000 homeowners in the Republic on tracker mortgages are benefiting from the record low rates. Some people have mortgage rates as low as 1.5% as their tracker rate has been set at 0.5% above the ECB rate.

Tracker mortgages involve a contractual promise that rates will always be set at a percentage over the ECB rate. Most trackers are set at 1% to 1.5% above the ECB rate, meaning that these householders are paying a rate of 2% or 2.5% on their mortgage.

This compares with standard variable rates that average around 4%. Many of those on tracker rates are paying up to €200 less a month than a householder who borrowed the same amount of money but has a standard variable rate.

Standard variable rates can rise at any time.

The ECB is set to meet again on Thursday, but is due to leave rates on hold for the 17th month in a row.