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Mortgage holders braced for ECB interest rate hike

A hike of 0.25 per cent is expected – bad news for those with tracker and standard variable rate mortgages.

Image: Woodleywonderworks via Flickr.com

THE EUROPEAN CENTRAL Bank is poised to hike interest rates later today, putting more pressure on mortgage holders.

The rise, which will be announced at a meeting in Frankfurt later today, will be the second this year and will increase the benchmark rate by 0.25 per cent to 1.5 per cent, reports Bloomberg. It’s also reported that a further hike is likely in the fourth quarter of the year.

It’s expected that ECB president Jean-Claude Trichet will say that the rise in the rate is necessary as he focuses on the “day job” of  keeping inflation under control. A chief European economist has told Bloomberg that “Trichet has drawn a line in the sand on Greece” and that it is up to eurozone political leaders fix the debt crisis. Jacques Cailloux says that the ECB is “losing patience”.

The Irish Independent reports that mortgage holders on a variable rate with AIB and Bank of Ireland could be hit twice a the banks put their rates up by more than 0.25 per cent in order to make up for not implementing the ECB’s April interest rate hike.

Today’s rise will add about €15 a month for every €100,000 borrowed for those with tracker mortgages, according to the paper.

Read more: Mortgage holders facing rate hike beyond ECB rise>

About the author:

Emer McLysaght

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