No increase in ECB for a year

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NorfBank

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The European Central Bank will hold interest rates at record lows for at least another year as it battles to revitalise a struggling economy and bring inflation back up to target according to a Reuters poll.

All 79 economists see no rise until at least April 2011 while forecasters give just a 5% chance of a rate hike by the end of this year, this is down from 10% last month. Overall the poll does not expect to see an ECB rate increase until October 2011.

The poll suggested ECB rates would rise by 25 basis points to 1.25 percent in the final three months of 2011 and then by an additional 25 basis points each quarter to the end of June 2012.

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Seems a sensible move as it would be a disaster for Greece,Ireland,Portugal among others if the ECB rate started rising now. It gives those on tracker mortgages an easier way of budgeting their finances through 2010-2011 as one item of outgoings not to have to worry will increase in the short term.
 
Good news for the huge number of tracker mortgage holders, bad news for the banks.

But they will get it off those on variable mortgages.
 
Variable rates are heading towards 8-9-10% now in the next two years. Banks will have to increase variable rates before the ECB increases. If we assume ECB will go to 4% then its going to be painful for variable rate holders (and new mortgage\loans).
 
aristotle said:
Variable rates are heading towards 8-9-10% now in the next two years. Banks will have to increase variable rates before the ECB increases. If we assume ECB will go to 4% then its going to be painful for variable rate holders (and new mortgage\loans).
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Do you really think they will hit that, there's no way most people could afford to pay those rates. I was posting on another topic yesterday regarding fixing my mortgage or staying on the variable rate. I presume you'd be recommending fixing if you think this is the way it will go.
 
Variable rates are already 3-4%. If ECB goes to 4% then variables will be 6-7%.

Will banks increase variable rates by another 1% -2% over the next year or two?
 
I would probably be only fixing for 3 years so I'm not sure its even worth it. If the ECB rate stays as is for the next 12 months and then starts to increase rates then I might not even work out any better off over the 3 year period by fixing now.
 
Mortgage rates from 1980 to 2007 from Money Guide Ireland - scary!! I wouldn't rule anything out with the banks
1980 14.15%
1981 16.25%
1982 16.25%
1983 13.0%
1984 11.75%
1985 13%
1986 12.5%
1987 12.5%
1988 9.25%
1989 11.4%
1990 12.37%
1991 11.95%
1992 13.99%
1993 13.99%
1994 7.49%
1995 7.00%
1996 6.75%
1997 6.90%
1998 5.85%
1999 5.60%
2000 6.09%
2001 6.09%
2002 4.70%
2003 4.20%
2004 3.49%
2005 3.65%
2006 4.86%
2007 5.46%
 
The rates in the 80s are shockingly high.

Why were rates substantially reduced in the late 90s and early noughties? Surely this was the period when the Irish economy was strongest in terms of low unemployment and more money in the economy?
 
Paulk said:
The rates in the 80s are shockingly high.

Why were rates substantially reduced in the late 90s and early noughties? Surely this was the period when the Irish economy was strongest in terms of low unemployment and more money in the economy?
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Membership of the EU, the ECB set rates for all EU countries as opposed to the Irish Central Bank.
 
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