ECB interest rate increase set to hit Irish mortgage holders

Mortgage holders will be bracing themselves for higher costs after the European Central Bank announced a change in policy that is set to see higher repayments for those with variable and tracker rates.

The European Central Bank (ECB) is now due to rise its key refinancing rate in July and again in September.

The news comes on the same day that it emerged that inflation has reached its highest rate in Ireland since the height of the economic recession in 1984. 

The latest figures from the Consumer Price Index showed that consumer prices has risen almost across the board with energy and fuel costs significantly increasing. 

The ECB has indicated two rises of 0.25pc, so far.

This is expected to impact around 450,000 people who have a tracker or variable rate mortgages in Ireland.

"We intend to raise the key ECB interest rates by 25 basis points at our July monetary policy meeting," says ECB President Christine Lagarde | Read more on the interest rate hike: https://t.co/UFCLhCC9Zs pic.twitter.com/dsOLZh7Mkt

— RTÉ News (@rtenews) June 9, 2022

A rise of 0.50pc could be added in September if high inflation persists.

It also means that future fixed rates will most likely become more expensive.

Each 0.25pc rise in the ECB rates will cost €30 more in monthly repayments for a €250,000 tracker mortgage.