ECB cuts a boost for borrowers

COMMERCIAL borrowers and the country’s 777,321 residential mortgage holders could be in line for significant savings, as economists across Europe predict and recommend that the European Central Bank cuts interest rates by a third.

The ECB shadow council, a group of 15 economists and portfolio managers who watch economic developments and monetary policy in the euro region and issue recommendations each month, wants the ECB to reverse its two benchmark rate hikes in 2011 and cut the rate from 1.5% to 1%.

A cut to 1%, if passed on by the banks, would cut €60 a month off repayments on a €200,000 home loan (€720 a year). While the ECB shadow council make recommendations, a number of economists are predicting that the ECB will cut rates in 2012.