Is ECB’s latest rate cut any helptomortgageholders?
Q Eurozone interest rates have been cut again. But will this – or anything else – bring any respite to struggling mortgage payers? My interest rate is over 4% and I have an overdraft of 10%. Yet my bank is offering to pay me just 0.8% interest on savings. A The European Central Bank cut its key interest rate to zero and dropped another one to minus 0.4%. This is to make banks lend more and help kickstart the EU economy. The ECB signalled that there would be no more rate cuts but rates are not expected to start rising either.
So what does that mean to your mortgage?
If you have a Tracker loan, for say €250,000, your bank has to pass on the cut, saving you €5 a month. Otherwise, it doesn’t have to pass on the cut –and is not likely to.
However, the cut helps underpin a general fall in mortgage rates, which have dropped from 4.4% at the end of 2014 to around 3.7% now.
Unfortunately most banks don’t offer the best deals to their existing (i.e. loyal) customers and save them for newbies. But you should be able to get a mortgage as low as 3.3% by moving to a cheaper lender. Check out bonkers.ie.
As regards savings, the best deposit rates of up to 3% are paid by regular savings accounts if you drip-feed money in at no more than €1,000 per month.
RaboDirect’s 1% ‘on demand’ rate also deserves a mention as you also get instant access at a rate that’s pretty close to the best long-term deal.
If you’re liable for Deposit Interest Retention Tax and don’t mind locking your money away for years, An Post is worth a look.
It’s no coincidence that Irish savers poured €370m into its savings schemes last year.
The rates aren’t stellar but they beat the banks, especially as you’re spared DIRT at 41% to 45% on most of these An Post savings products. Q I missed the deadline to sell my Verizon shares – all two of them! Is it worthwhile to sell them now? They’re only worth around €100. A A surprising 60% of Irish Verizon shareholders missed a recent offer to sell their shares for free.
So there are still 86,000 with less than 10 Verizon shares (most of these received through holdings in Vodafone after a deal between the two firms last year.)
The Verizon shares in question are now US-registered, which makes them pricier to sell. Dublin-based Campbell O’Connor are among the cheapest brokers for one-off share deals. Yet they charge €40 commission plus $50 in special US dealing charges.
That tots up to around €85 – leaving you with just €15.
If you think that’s bad, there are 32,000 Irish people with only one Verizon share who would make a loss if they ever went to sell it!
Campbell O’Connor would consider opening a charity account where people could simply donate their shares for free if there were enough demand.
Otherwise, Verizon has given no indication that it will offer another chance to sell shares for free.
But with so many shareholders left hanging, they might consider it again at some point as it’s expensive and a lot of hassle to have so many people here and in the UK that must be kept informed of every corporate development.