Harris meets banks over mortgage interest rates

The Taoiseach has told the banks he wants people to feel the benefits of reduced monthly mortgage repayments as quickly as possible as interest rates begin to fall.

Simon Harris has now concluded a series of meetings with banks, credit unions and non-bank lenders.

The meetings focused on mortgage interest rates, the housing sector and finance for small and medium-sized businesses.

The Taoiseach said: “I know that people are still hurting due to the cost of living. Inflation has eased, but it doesn’t mean prices are coming down or it’s any easier to make ends meet.

Simon Harris said he now wants monthly repayments to fall just as quickly as they rose.

” It is, of course, a commercial decision for each bank reflecting their different funding arrangements, but I emphasised the need for a responsible approach and it’s something the Government will monitor over the coming months,” he said.

Yesterday, Central Bank Governor Gabriel Makhlouf said he was comfortable with just one more interest rate cut from the European Central Bank this year as he needed more time to gain confidence inflation was headed to the ECB’s 2% goal.

Investors are pricing in at least one, but more likely two more ECB interest rate reductions by December after seeing inflation fall from 10% in late 2022 to just 2.5% last month.

But Mr Makhlouf struck a more cautious tone in an interview with Reuters, even though he expected rates to fall eventually.

“I am comfortable with expectations of another cut,” he said on the sidelines of the ECB’s Forum on Central Banking in Sintra, Portugal.

“I think two cuts today, at the beginning of July, is probably going a little bit too far. I’m not saying I’d rule it out.”

The ECB began undoing its steepest-ever streak of interest rate hikes last month but President Christine Lagarde said the central bank for the euro zone is in no hurry to lower borrowing costs further as progress from here appeared to be slower.

Data showed inflation in the 20 countries that share the euro slow to 2.5% in June from 2.6% a month earlier.