Irish mortgage experts warn of tough decisions as ECB meets 

Markets are betting the ECB will have reduced rates by 1.5% by the end of the year, but will hold fire for some months yet

ECB president Christine Lagarde. 

The European Central Bank (ECB) meets in Frankfurt on Thursday afternoon, as experts warn that Irish mortgage borrowers will face big decisions over refinancing their home loans this year. 

Financial markets are expecting that ECB president Christine Lagarde, in remarks to the media following the first gathering of the governing council of 2024, will continue to push against bets that the central bank will cut its interest rates aggressively in the coming months. 

The ECB is expected to delay starting a series of rate cuts at its first two monetary meetings this year, on Thursday and and on March 7, but will more than likely announce its first rate cut in April, according to financial markets.  

Since before Christmas, European central bankers have been forced to wage a war of words against market expectations that it will need to cut rates swiftly as the pace of eurozone inflation slows and manufacturing activity in the key eurozone economies of Germany and France contracts.  

To tame soaring inflation, the ECB had started to hike rates sharply from the summer of 2022. However, the timing of the first rate reductions and the depth of the cuts this year still raises many difficult decisions for Irish mortgage holders.

Mortgage broker Michael Dowling at Dowling Financial said looming rate cuts this year provide some welcome news for tracker mortgage holders, who have been hard hit since the middle of 2022 because their mortgage interest repayments are tied automatically to ECB rate changes. 

Tracker holders can expect cuts of up to 1.5% by the end of the year, if market expectations for ECB reductions are realised, Mr Dowling said. 

However, he said that the 70,000 households whose fixed-rate mortgage terms expire this year will have to make some tough decisions and should seek out advice because borrowers will have choices beyond the rates offered by their current lenders. 

Stephen Hamilton at Mortgageline warned that interest rates may not be cut as deeply this year as markets believed as recently as last month, because the ECB will be wary of calling an end to its fight against inflation. However, the record low mortgage rates of much of the past decade "will not be coming back again", he said.