Irish Housing Minister Michael Finneran has welcomed the European Central Bank's (ECB) move to reduce interest rates to record low levels.

Tuesday's rate decrease is the fourth decrease since October bringing the cumulative rate decrease in the period October 2008 - March 2009 to 2.75%, from 4.25% to just 1.5%.

For a typical mortgage holder - two earner household with a €300,000 mortgage over 30 years - on a variable interest rate, annual repayments have dropped by over €3,500.

Minister Finneran: "The latest change will bring further welcome relief to mortgage holders. We are in a difficult economic environment and everyone is feeling the effects.

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"People are losing their jobs and others are noticing reductions in take-home-pay, so it's not an easy time to have a mortgage. This is reflected in the fact that reliance on mortgage interest supplement is increasing significantly.

"However, the ECB's movement, and more particularly, announcements from all of the main lending institutions that they will pass on, in full, the most recent cut as they have done with previous reductions, is very positive news."

Mr Finneran said it would now mean that the annual cost of a typical mortgage will have dropped by more than 23% since September last - an extra €300 a month in the pockets of families who need it.

The Minister referred to the efforts of the Government over recent months to ensure that Irish financial institutions have access to the normal liquidity and funding which they need to operate their day-to-day business.

"Without taking steps such as the bank guarantee scheme, and more recently, the proposed recapitalisation of the two largest banks, I've no doubt that lending institutions would have found it more difficult to pass on the rate reductions to their customers," he said.

"The fact that they have is testament to the effectiveness of the Government’s efforts," added the Minister.

(PR/JM)