Homeowners with tracker mortgages will pay an average of €1,000 more a year after the European Central Bank (ECB) hiked interest rates by half a percent again today.
This means that an average mortgage of €300,000 for 25 years will see their bills rise by an extra €960, €80 a month, because of the hike.
The new ‘base’ rate will be 3.5%, which will be passed on to all tracker customers immediately, while variable rate customers can expect to see increases down the tracks.
READ MORE: More mortgage misery on the way for Irish homeowners as bills set to rise
The ECB was widely expected to hike interest rates again this morning in a further bid to dampen runaway inflation.
The latest inflation figures for February showed that inflation is on the rise again, with prices increasing by an average of 8.5%, up from 7.3% in January.
And it looks like there could be further interest rate hikes from the ECB in the coming months too as the expert bankers there do not believe they have gotten inflation under control.
ECB chief, Christine Lagarde, said they are: “Not seeing a lot of improvement in underlying inflation.”
Trevor Grant, Chairperson, Association of Irish Mortgage Advisors (AIMA), said first-time buyers will be hit particularly hard.
Mr Grant said: “The latest ECB rate rise brings the key ECB lending rate to 3.5%.
“For the most part, it is those on tracker mortgages who have taken the brunt of the 3.5 percentage point increase in the ECB rate since last July as their mortgage rate automatically increases – or falls – in line with ECB rate moves.
“However, others are increasingly being drawn into the firing line.”
“First-time buyers are paying substantially more for a mortgage today than would have been the case if they were able to take out a mortgage before interest rates started to increase.
“For those first-time buyers who have been struggling for years to get onto the property ladder, the higher mortgage costs now thrown into the mix is incredibly frustrating.
“It increases their mortgage bills and prices them out of parts of the market which they would have afforded previously.”
“The fixed interest rates available today are much higher than they were a year ago.”
The current basic interest rate is 3%, so the latest hike brings the rate up to 3.5%
A homeowner with a fairly standard €300,000 mortgage over 25 years would have to pay almost €80 more a month with the new rate, or close to €1,000 extra a year.
If your mortgage is for a home in a city centre it would not be uncommon to have a mortgage for €600,000, meaning the repayments will jump by €150 to €160 a month.
The average value of a mortgage in Ireland stands at just under €300,000, at €284,623.
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