Shock for mortgage holders in Longford as ECB interest rates rise is double what was expected
Hundreds of thousands of mortgage holders will pay a higher monthly rate after the European Central Bank raised its key lending rate today by double what was expected.
It had been anticipated that rates would increase by .25pc, but rates were increased by .50pc, it has been confirmed.
The decision to hike the rate will hit those on tracker mortgages, who will be paying more in just over a month's time.
And banks are likely to eventually push up variable rates, although no imminent rise in variable rates is expected for a few weeks.
Martina Hennessy, Managing Director of digital mortgage platform doddl.ie said: “The ECB has chosen to accelerate interest rate increases with the announcement of a bigger hike than expected.
“This increase of 0.5 per cent is not good news for tracker mortgage holders who will have one month before seeing an increase of €23 per month for every €100,000 owed over a 25 year term".
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Those with a mortgage of €250,000 - which is the average mortgage in Ireland - will pay an extra €696 a year, according to Ms Hennessy.
“It’s expected that variable rates will also rise in the near future, while those on short-term fixed rates will eventually feel the pinch when they roll out of lower fixed rates into a higher rate environment. For these, I would advise checking if there is a penalty to break out of your current fixed rate if you want to lock in for longer.
“Rising funding costs for mortgage lenders continue to pose a threat to mortgage rates in general, with upward movement on rates announced by a number of lenders in the last two months and more expected.
“With many aware of imminent rate increases, mortgage switching is at an all-time high as people seek to secure more long term, low cost and flexible fixed rates. Fixing your mortgage is the only way to have security over rising interest rates,” Ms Hennessy said.
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