The European Central Bank's recent decision to decrease interest rates by 0.25 percentage points is expected to directly benefit around 130,000 homeowners with tracker mortgages. A typical borrower with a €200,000 tracker mortgage could save approximately €25 monthly on repayments, contributing to total savings exceeding €150 after several previous cuts. The ECB's action pressures vulture funds that manage high-variable-rate loans, which impact mortgage prisoners. Although fixed rates are decreasing for new customers, existing variable rate payers might still experience higher payments which raises concerns for savers regarding interest rates on deposits.
As usual, tracker customers will benefit almost immediately from the cut. Also benefiting will be the thousands of so-called mortgage prisoners whose loans were sold to vulture funds.
Mortgage lenders in this country have responded to the ECB moves by decreasing fixed rates for new customers, while savers are likely to start seeing lower interest rates on their deposits.
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