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ECB cut's interest rates by 0.5%

  • 08-10-2008 12:28pm
    #1
    Closed Accounts Posts: 7,097
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    Sounds like a big cut to me, considering that all the increases in the last few years were 0.25%. Apparently most Irish banks will not be passing the cut onto customers...

    Is there any chance that the banks are just playing poor mouth now and putting on the beal bocht to increase profits??? They have a guarantee from the state now, still no improvement, governments have been wheelbarrowing billions of Euro into the financial system, still no improvement. Now interest rate cuts that only benefit the banks, still likely no improvement...

    Are we being taken for a ride here lads???


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Comments

  • Registered Users, Registered Users 2 Posts: 6,594 jaykay74
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    Darragh29 wrote: »
    Sounds like a big cut to me, considering that all the increases in the last few years were 0.25%. Apparently most Irish banks will not be passing the cut onto customers...

    Is there any chance that the banks are just playing poor mouth now and putting on the beal bocht to increase profits??? They have a guarantee from the state now, still no improvement, governments have been wheelbarrowing billions of Euro into the financial system, still no improvement. Now interest rate cuts that only benefit the banks, still likely no improvement...

    Are we being taken for a ride here lads???

    afaik the guarantee is not in place yet as its not passed the dail yet and it needs clarification from european competition authority or whatever its called. I'd say most of the interest rate cut will be passed on.

    I think its clear that its time for the money fight to recommence and to buy that 50" plasma that been put off these past 3 weeks or so. I will also purchase a number of knockdown properties.


  • Registered Users, Registered Users 2 Posts: 802 Mylow
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    Darragh29 wrote: »
    Sounds like a big cut to me, considering that all the increases in the last few years were 0.25%. Apparently most Irish banks will not be passing the cut onto customers...

    They will pass it onto anyone with tracker mortgages.


  • Banned (with Prison Access) Posts: 451 thetyreman
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    Darragh29 wrote: »
    Sounds like a big cut to me, considering that all the increases in the last few years were 0.25%. Apparently most Irish banks will not be passing the cut onto customers...

    Is there any chance that the banks are just playing poor mouth now and putting on the beal bocht to increase profits??? They have a guarantee from the state now, still no improvement, governments have been wheelbarrowing billions of Euro into the financial system, still no improvement. Now interest rate cuts that only benefit the banks, still likely no improvement...

    Are we being taken for a ride here lads???
    If its a case that they dont pass it on,then i think the goverment should make them.If this guarentee by the govm hasnt got a load of small print/conditions attached to protect our guarentee for the banks,then yea it will be the banks that will be the only winners and they will shaft Jo Soap again,again,again.


  • Registered Users, Registered Users 2 Posts: 24,230 ejmaztec
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    I've not heard any bank admit any kind of responsibility for the sh1t they've made. I thought it hilarious a couple of days ago, when the UK government was involved in formulationg a rescue package, and the big bankers, being impatient for a decision, suggested that the government get it's finger out without further delay in resolving the problem. The bankers really have got some neck.


  • Registered Users, Registered Users 2 Posts: 15,956 Villain
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    Ah yea once the German's have a banking problem the ECB drops its rates, the German's have far too much power in this EU


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  • Registered Users, Registered Users 2 Posts: 2,535 Radharc na Sleibhte
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    Mylow wrote: »
    They will pass it onto anyone with tracker mortgages.

    I don't know what a tracker mortgage is.

    Sorry :D


  • Registered Users, Registered Users 2 Posts: 2,535 Radharc na Sleibhte
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    Villain wrote: »
    Ah yea once the German's have a banking problem the ECB drops its rates, the German's have far too much power in this EU

    Its all about zee Germans.
    Once German inflation looks likes its on the way down and the German economy is fecked BAMMMM we get a half a percent cut.


  • Registered Users, Registered Users 2 Posts: 1,828 ven0m
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    Makes no difference - Lenihan will be taking any gains from it back off us next month in the Budget.

    It would have been better for the ECB to announce investigations into European banking practices, as well as issuing investigations into all share-olding bak directors who have profitted from government intervention schemes.

    same old same old though ........ this news is nothing more than a smokescreen to stop people asking further questions of an industry that is long overdue providing answers for its behaviour.


  • Moderators, Business & Finance Moderators Posts: 3,816 LFCFan
    Mod ✭✭✭✭


    would it not make sense for the ECB to lower it's rates significantly to try and kick start the European economy again? When the dollar was stronger and the ECB rate was really low, things were ticking along nicely. It's only since the ECB kept increasing rates that things started going belly up. Now that it's known what the biggest cause of all this ****e has been (the sub prime market in the US) then systems can be put in place to stop that happening again.


  • Subscribers Posts: 32,859 5starpool
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    Glad I have a tracker mortgage now. I'd prefer to have none, or a smaller one, but at least it is something.


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  • Registered Users, Registered Users 2 Posts: 2,535 Radharc na Sleibhte
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    5starpool wrote: »
    Glad I have a tracker mortgage now. I'd prefer to have none, or a smaller one, but at least it is something.


    :D +1
    Few bob back i mo phoca.


  • Registered Users, Registered Users 2 Posts: 12,564 whiskeyman
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    Darragh29 wrote: »

    Are we being taken for a ride here lads???

    No, but yore ma is!!!

    This is AH btw...


  • Closed Accounts Posts: 7,097 Darragh29
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    whiskeyman wrote: »
    No, but yore ma is!!!

    This is AH btw...

    lol! :D


  • Registered Users, Registered Users 2 Posts: 6,594 jaykay74
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    Villain wrote: »
    Ah yea once the German's have a banking problem the ECB drops its rates, the German's have far too much power in this EU

    Alright, Mr. Burns…you win. But beware…we Germans aren’t all smiles und sunshine.


  • Registered Users, Registered Users 2 Posts: 15,956 Villain
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    jaykay74 wrote: »
    Alright, Mr. Burns…you win. But beware…we Germans aren’t all smiles und sunshine.
    Oh I fecking know. I watched enough enough german p0rn to know that


  • Closed Accounts Posts: 44 jayo27


    how long before the banks pass on the cuts even to trackers?


  • Closed Accounts Posts: 26 Rainy Day


    Trackers should benefit straight away I believe.


  • Closed Accounts Posts: 50 emmagean
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    LFCFan wrote: »
    would it not make sense for the ECB to lower it's rates significantly to try and kick start the European economy again? When the dollar was stronger and the ECB rate was really low, things were ticking along nicely. It's only since the ECB kept increasing rates that things started going belly up. Now that it's known what the biggest cause of all this ****e has been (the sub prime market in the US) then systems can be put in place to stop that happening again.

    couldnt agree more. when the interest rate rises began back in 2006 I was convinced it would slow down the housing market, which in turn would result in job losses etc, and thats exactly what has happened. A 0.5% cut is more than we hoped for, but I dont think it will help the housing market in the short term. If we see a series of 0.25% cuts over the coming months then I'm sure the property buying will pick up again. And seeing as the performance of our economy is directly related to the performance of the housing market, that can only be a good thing.

    Of course I'm not a financial expert (quite obviously I'm sure!) and I could be totally wrong!! But its what I believe

    Todays rate cut saves me €200 a month!
    Looking forward to giving it all back to Mr. Lenihan from next Tuesday.

    <rant>On a seperate note.....if the company I worked for messed up their finances like the present government has messed up the economy, they would have all been forced to resign. Instead, our leaders heap praises on each other and tell us all what a difficult job Mary Harney has and isnt she great for giving it a go! Only in Ireland......</rant over>


  • Registered Users, Registered Users 2 Posts: 2,494 kayos
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    And of course most of the banks have pulled their tracker mortgage products now a days....


  • Registered Users, Registered Users 2 Posts: 1,828 ven0m
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    LFCFan wrote: »
    would it not make sense for the ECB to lower it's rates significantly to try and kick start the European economy again? When the dollar was stronger and the ECB rate was really low, things were ticking along nicely. It's only since the ECB kept increasing rates that things started going belly up. Now that it's known what the biggest cause of all this ****e has been (the sub prime market in the US) then systems can be put in place to stop that happening again.

    The biggest cause was low interest rates in the U.S. markets, plus greedy lenders giving loans out to people who should not have been able to pass viability critera.

    It also happened here where banks got super greedy along with developers, & this whole bail out here was really due to the sheer volume of developers who were within months of defaulting on huge loans for properties developed but not yet sold or placed on the market or even real estate not yet developed due to costs outweighing the 'accepted' levels of profitability.


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  • Registered Users, Registered Users 2 Posts: 125 barrymac20
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    I was delighted to hear about interest drops the same as anyone else so i went onto the IIB website to see if there was any mention of it. The only thing i noticed was that they had put their own rates up by 0.2% from 01/10/08. Are they not supposed to inform customers of increases? Seems to me that they increased their rates so that a decrease in ECB rates will not only mean lower repayments by them but that repayments to them will be virtually unchanged! Disgrace. Did anyone else notice this?


  • Closed Accounts Posts: 6,151 Thomas_S_Hunterson
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    MikeySligo wrote: »
    Its all about zee Germans.
    Once German inflation looks likes its on the way down and the German economy is fecked BAMMMM we get a half a percent cut.

    Bundesbank...ECB....same thing:p


  • Closed Accounts Posts: 13,249 Kinetic^
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    barrymac20 wrote: »
    I was delighted to hear about interest drops the same as anyone else so i went onto the IIB website to see if there was any mention of it. The only thing i noticed was that they had put their own rates up by 0.2% from 01/10/08. Are they not supposed to inform customers of increases? Seems to me that they increased their rates so that a decrease in ECB rates will not only mean lower repayments by them but that repayments to them will be virtually unchanged! Disgrace. Did anyone else notice this?

    I've been with IIB for 3+ years now. I usually get a letter within a month of the ECB interest rate increase. I expect the same for the decrease. I'm on a tracker mortgage btw (I do know what a tracker mortgage is), I think it's going to save me just over a €100 each month. :)


  • Registered Users, Registered Users 2 Posts: 7,588 Bluetonic
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    A lot of tracker mortgage T&C state that cuts do not have to be passed on in exceptional circumstances.


  • Registered Users, Registered Users 2 Posts: 736 darsar
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    Rainy Day wrote: »
    Trackers should benefit straight away I believe.

    And of course my mortgage went out yesterday :mad:


  • Closed Accounts Posts: 2,379 Jimbo
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    Can someone tell me what is stoping the ECB reducing it's interest rate significanlty , say 1%, to kick start the markets again?


  • Registered Users, Registered Users 2 Posts: 15,956 Villain
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    The ECB's primary function is to keep inflation low ideally below 2.5%, the eurzone average was near 5% but has come back down to near 4% now, the ECB has stated it would not drop internest rates until inflation was reduced even more but now that inflation is going down and banks are under pressure and the Germans are under pressure the ECB has been forced to act.

    I wouldn't expect them to drop much more unless we see more banks folding, the downsize of this is the Euro will weaken against the Dollar which will increase the cost of oil to us in the euro zone


  • Registered Users, Registered Users 2 Posts: 7,588 Bluetonic
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    BOI & Halifax will be effective Nov 1st.


  • Registered Users, Registered Users 2 Posts: 7,588 Bluetonic
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    Villain wrote: »
    I wouldn't expect them to drop much more unless we see more banks folding, the downsize of this is the Euro will weaken against the Dollar which will increase the cost of oil to us in the euro zone
    Even if this is the case, the price of oil is decreasing as fear of a global recession grow stronger (near month trading at around 80USD). Also a stronger dollar (or weaker euro as the case is) will benefit Irish economic exports, the US being one of our most important exporters.


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  • Registered Users, Registered Users 2 Posts: 15,956 Villain
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    Bluetonic wrote: »
    Even if this is the case, the price of oil is decreasing as fear of a global recession grow stronger (near month trading at around 80USD). Also a stronger dollar (or weaker euro as the case is) will benefit Irish economic exports, the US being one of our most important exporters.

    Oh it will surely help exports, I was more thinking of affects on Joe Soap, although I think the Budget will make what ever positive affects of a .5% interest rate cut look very small. Worrying times ahead.


  • Registered Users, Registered Users 2 Posts: 7,588 Bluetonic
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    Even if oil was at 90usd and the euro was at 1.60, your not going to see sub 1.10 pump prices anyhow for J. Public unfortunately.

    Opec will soon cut production to being the price of a barrel to 100usd, they won't allow it to drop further.

    Anyhow eur/usd is two pips higher than yesterday so combined with the .5 cut from the fed you won't see much of a eur/usd change.


  • Closed Accounts Posts: 2,917 towel401
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    MikeySligo wrote: »
    I don't know what a tracker mortgage is.

    Sorry :D

    For people who live in trackers instead of houses


  • Registered Users, Registered Users 2 Posts: 281 Rodar08
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    Well I live in a tracker, lol. but I'm not too well up on all this interest thingy business - I just pay my mortgage and don't ask any questions to save on the confusion! I know I should so ..... someone was saying it will cut about 100 euro off their mortgage a month - Q. If I'm paying 868 a month in a 35 yr mortgage what will this decrease in interest rate mean for me in euros saved a month? Anyone know?


  • Registered Users, Registered Users 2 Posts: 7,581 uberwolf
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    Take your principal amount, multiply it by the 0.5% and divide the answer by 12. That's the monthly saving on interest.


  • Registered Users, Registered Users 2 Posts: 281 Rodar08
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    Hmm! Seems so simple now you've explained that :o! Thanks ;)


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  • Closed Accounts Posts: 4,048 SimpleSam06
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    barrymac20 wrote: »
    I was delighted to hear about interest drops the same as anyone else so i went onto the IIB website to see if there was any mention of it.
    To be honest it depends where banks are getting their loans from. For many banks the Euribor and Libor rates will be a lot more important than the ECB rate. As the Japanese found, dropping interest rates to 0% often isn't enough.

    I mean, the US debt clock ran out of digits.

    And before anyone starts celebrating this, check the fine print on your mortgage agreement, we had a man in prop/accom a while back who did just that, and found out it said the mortgage would track whichever was highest, euribor or ECB rates.
    Villain wrote: »
    and the Germans are under pressure the ECB has been forced to act.
    Not really under that much pressure though. Thats why I find this an interesting move from the ECB. The Germans are generally low debt, high saver people, with a diverse export and industrial base for their economy. By all rights they should be doing fine. Mind you, the scale of the problem is such that if things drop across the board, they might not have anywhere to export to.

    This looks like a knee jerk move tbh.


  • Registered Users, Registered Users 2 Posts: 719 Bass Cadet
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    Did I hear correctly on the news that HBOS won't pass on the rate cut (to trackers) until after November 1st?? :mad:


  • Registered Users, Registered Users 2 Posts: 7,588 Bluetonic
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    Bass Cadet wrote: »
    Did I hear correctly on the news that HBOS won't pass on the rate cut (to trackers) until after November 1st?? :mad:
    Indeed, same as BOI and Halifax.

    http://www.bankofscotland.ie/index.jsp?1nID=93&2nID=119&nID=2064&aID=2190

    This is standard procedure.


  • Closed Accounts Posts: 5,217 FX Meister
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    booooo


  • Closed Accounts Posts: 24 Sunfowers


    We have just drawn down our mortgage with IIB and were informed the rate had gone up since our first loan pack. I rang to find out if the cut would be implemented to variable mortgage holders but was told that no decision has been made by them yet.


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  • Closed Accounts Posts: 409 qwytre
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    emmagean wrote: »

    Todays rate cut saves me €200 a month!
    Looking forward to giving it all back to Mr. Lenihan from next Tuesday.
    [/B]

    200 per month ?

    You must have a huge mortgage, a very short mortgage term or a high interest rate?


  • Registered Users, Registered Users 2 Posts: 43,311 K-9
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    emmagean wrote: »
    couldnt agree more. when the interest rate rises began back in 2006 I was convinced it would slow down the housing market, which in turn would result in job losses etc, and thats exactly what has happened. A 0.5% cut is more than we hoped for, but I dont think it will help the housing market in the short term. If we see a series of 0.25% cuts over the coming months then I'm sure the property buying will pick up again. And seeing as the performance of our economy is directly related to the performance of the housing market, that can only be a good thing.

    Of course I'm not a financial expert (quite obviously I'm sure!) and I could be totally wrong!! But its what I believe

    Todays rate cut saves me €200 a month!
    Looking forward to giving it all back to Mr. Lenihan from next Tuesday.

    As has been shown in the US, who dropped interest rates substantially, interest rates aren't the problem.

    It doesn't matter if rates are 1% if no banks are lending.

    If you actually look at 2006/2007 the biggest part of the problem here was McDowell opening his mouth about Stamp Duty in 06. Cowen knew reducing stamp duty would go directly to builders, only delaying the inevitable. They substantially increased mortgage interest relief instead.

    You'll find if you look at PTSB's first time buyer affordability index that this offset the interest rate increases and actually made it cheaper for part of 07.

    The problem then was the sub prime crisis took over and banks wouldn't lend, despite FTB affordability.

    So interest rates wasn't a major factor then and it will not be this time until people get a handle on bad debts.

    It may mean more disposable income for loan payers, but that depends on inflation!

    Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.



  • Registered Users, Registered Users 2 Posts: 7,588 Bluetonic
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    qwytre wrote: »
    200 per month ?

    You must have a huge mortgage, a very short mortgage term or a high interest rate?
    It could be any of those.

    For example 600k @ ECB +1.3 over 30 years is around 200 a month saving.

    600k is not a huge mortgage by any means in this day and age.


  • Registered Users, Registered Users 2 Posts: 86,729 Overheal
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    I have faith in my economic system...


  • Registered Users, Registered Users 2 Posts: 47 Clements


    Does anyone know if this effects IIB customers on a variable rate?? I have tried to get through to them but I cannot get an answer:mad:


  • Closed Accounts Posts: 409 qwytre
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    Bluetonic wrote: »
    It could be any of those.

    For example 600k @ ECB +1.3 over 30 years is around 200 a month saving.

    600k is not a huge mortgage by any means in this day and age.

    I would say 600k is a big mortgage, if the average house price is around 300k then the average mortgage is a bit below that.


  • Closed Accounts Posts: 7,097 Darragh29
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    qwytre wrote: »
    I would say 600k is a big mortgage, if the average house price is around 300k then the average mortgage is a bit below that.

    +1.


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