Major blow for Irish mortgage holders as ECB reveal ANOTHER hike – with thousands of people here affected b...
IRISH borrowers have been dealt another blow as the ECB is expected to raise its interest rates AGAIN after four hikes last year.
The Governor of the Central Bank said that he would not be surprised if interest rate increases continue into the second quarter of the year after two expected moves in February and March.
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The ECB has all but committed to raising its key rate by half a percentage point next week to 2.5 per cent.
But policymakers are expressing different preferences for March, suggesting the debate is wide open despite guidance for significant policy tightening at a "steady pace".
Governor of the Central Bank Gabriel Makhlouf said that, as things stand, rates will need to go up again in March, but policymakers must "wait and see exactly what the data tells us."
Makhlouf told lawmakers in Dublin: "Bearing in mind that inflation is very high and core inflation has actually gone up slightly, it would not be surprising to see us continue on this path of interest rate rises beyond the first quarter."
While euro zone inflation eased to an annualised 9.2 per cent in December from 10.1 per cent a month earlier, Ireland's Makhlouf said it remains "far too high."
He said: "Interest rates will have to rise significantly at a steady pace to reach levels sufficiently restrictive to ensure a timely return of inflation to our 2 per cent medium-term target."
This comes after Irish mortgage holders were hit earlier this month after Permanent TSB announced the second hike of its mortgage rates in just two months.
On Monday, January 16, the bank rose interest rates on its fixed rates by a weighted average of 0.51 per cent.
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The increase will see a typical first time buyer pay an additional €120 to the monthly cost of their mortgage.
Bank of Ireland and AIB are now expected to follow suit and raise their fixed rates.
Permanent TSB has said the increases ranged from 0.05 per cent to 0.8 per cent depending on the length of the fixed term, the size of the loan and the size of the loan relative to the value of the property in question.
It added that there would be no changes for mortgage customers on existing fixed rates, and there are no changes to variable rates for new or existing mortgage customers.
The rates applicable to tracker mortgage customers continue to reflect the current ECB rate, in line with the specific terms and conditions of the loans.
