As one of his last acts as ECB president, Jean Claude Trichet kept interest rates level and there was no decrease as speculated by some commentators.
In a functioning market this would be positive news for existing home owners and prospective home buyers, however, we are not operating in a functioning market.
There was no decrease in the key Eurozone interest rate announced today, however decreased competition in the Irish mortgage market means that lenders would have been unlikely to pass on any decrease to variable rate mortagage holders in any event.
At best, todays move can be seen as European political confidence in the Eurozone economy, dispite signs of a slowdown. If a double dip was imminent we would have no doubt seen a slight decrease in the interest rate today.
There can be no doubt that we are in a very different position to where we were last spring when we saw interest rates increase and it looked like homeowners could have been paying up to 5.2% by the end of the year. This is now highly unlikely. In effect the market has experienced a reversal in the last six months.
It remains to be seen how Trichet’s successor Mario Draghi will treat todays move. The obvious strategy for Draghi will surely be to effect a change within weeks if any such change is to be made, otherwise it is likely that we will see very little movement until the end of the year.