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Mortgage rates to remain low amid Brexit uncertainty

Growth cut: EU's forecasts for eurozone are slashed by a third

Borrowers: Irish households to get reprieve on debt repayments

Mortgage holders here can breathe a sigh of relief as the threat of an interest rate hike in the next two years is receding.

The EU yesterday cut growth forecasts for the eurozone as the threat of a crash-out Brexit continues to loom.

Ireland's borrowers are set for a reprieve as the European Central Bank (ECB) now looks certain not to raise interest rates in 2019.

It is also likely it may not even manage to do so in 2020.

Amid the uncertainty of Brexit, the EU cut its forecasts for eurozone economic growth by a third yesterday.

That means it won't be able to normalise interest rates, which are trapped at all-time lows, without risking an even greater slowdown.

German banking giant Deutsche Bank is now forecasting there will be no ECB rate hike until December 2020.

Raising rates would hit hundreds of thousands of borrowers here.

More than a decade after the crash, Irish households are the fourth most heavily indebted in Europe.

Data released by the Central Bank yesterday showed that household debt here was €137.5bn at the end of September last year.

The 300,000 borrowers with a tracker mortgage benefit most from the low rates, as do a similar number of households on variable-rate mortgages.

Interest on trackers is linked to the ECB rate, and if rising rates meant it was more expensive for banks themselves to borrow, those increased costs could be passed on to variable-rate customers.

The European Commission yesterday projected Ireland's economy will grow 4.1pc this year.

This is the joint-second highest in the eurozone, but down from a 4.5pc projection in November.

The Commission slashed its overall growth forecast for the eurozone to 1.3pc, down from 1.9pc.

Downgrades were especially sharp for Italy, the bloc's third-largest economy which is already struggling with the budget confines of the Stability and Growth Pact; and for Germany, the economic powerhouse of Europe which has ridden a post-recession export boom that has now come to an abrupt halt.

The outlook for inflation was also lowered.

As the Brexit date of March 29 looms, a disorderly Brexit would exacerbate the problems seen in the big European economies.

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