Interest rates were hiked by the European Central Bank (ECB) again on Thursday, adding averages of hundreds more euro a year to the cost of most family mortgages.
This is the fifth hike since last summer as Europe’s banking authorities battle desperately to control inflation.
It means hundreds of thousands of households are waking up to the bad news that the main pillar banks are passing on, or are preparing to pass on, the interest rate increases.
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However, there was increased hope earlier of an extension of cost of living supports from the government after another bumper month of tax receipts saw the Exchequer pull in €7.5billion for January alone.
Finance Minister Michael McGrath said that “the Irish economy is in good health” and “we have the resources to do so” when asked if an extension of supports is imminent.
Many of the supports are due to expire at the end of this month, but there is increasing hope that some of them will be extended as homes and businesses are still struggling to pay bills.
The ECB base rate is now 2.5%, an increase of 0.5%, with the Bank already promising more hikes on the way in the next few months as part of their strategy to dampen down inflation.
AIB announced that the increases will apply to variable rates from March too, the first time they have done so during the latest series of hikes, while Bank of Ireland said they would be upping the cost of most of their tracker mortgage products from February 22.
Mortgage customers of both banks on tracker mortgages automatically see their rates go up in tandem with ECB increases.
Sinn Féin finance spokesman, Pearse Doherty, said that the Government must consider new mortgage interest supports for cash-strapped households.
He said: “Borrowers will be paying thousands of euros more in interest this year in the midst of a cost of living crisis.
“Others are likely to see their interest rates increase in the coming period.
“It is now clear that timely, targeted and temporary mortgage interest relief must be introduced to support hard-pressed borrowers.”
Meanwhile, Finance Minister Michael McGrath has given strongest Government indications yet that crucial cost of living cash supports will continue past the current end of February deadline.
He was speaking to the Today with Claire Byrne Show on RTE Radio One on Thursday morning.
Mr McGrath said: “We are in a position where we can make interventions” when asked about cost of living supports being maintained past February.
He then added: “We have the ability to step in and step out as appropriate, it is a judgement call.
“I’m very conscious in the months ahead we may have to make further interventions.”
The Minister in charge of the country’s finances said that “in principle” the Government would “intervene when the need is most.”
He said: “My sense is a lot of people are under real pressure.”
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