Home prices continue to rise in tandem with mortgage rate hikes, pushing the prospect of home-buying for thousands of people a long way off.
A fresh hike announced today by the European Central Bank (ECB) will send the cost of home loans and fixed interest rates skyrocketing.
People whose mortgages have been sold to vulture funds and who are already paying the highest interest rates in the state are bracing themselves for another big hit.
The ECB is expected to hike rates by 0.5 percentage points, meaning the cumulative impact of the four rate hikes will be almost €3,000 on a typical tracker mortgage.
New figures show the importance of the so-called Bank of Mum and Dad in bringing together a home deposit for those lucky enough to have parents who can leave them an inheritance.
The Central Statistics Office (CSO) said more than a third of Irish households have received at least one inheritance or sizable gift at some point.
Thirty percent received an inheritance and 9 percent received a gift. The median or mean value of these intergenerational wealth transfers was €80,200 among recipient households.
A recent CSO publication found that buyers are aging, with the number of joint buyers increasing significantly. In the last 10 years, the proportion of joint buyers has increased from 47 to 60 percent.
The average age of sole buyers rose from 34 to 41 years.
Rachel McGovern, Brokers Ireland’s Director of Financial Services, said: “This shows the tremendous social change that is taking place in our society as we appear unable to build enough homes at affordable prices.”
The ECB is expected to hike rates by 0.5 percentage point when it meets this week.
Further hikes by all lenders are likely to follow in the coming weeks. The Governor of the Central Bank of Ireland, Gabriel Makhlouf, has already warned of a further hike of 0.5 percentage points.
If announced within the week, it means the annual cost of repaying a €200,000 mortgage has skyrocketed by nearly €3,000 in one year.
Nearly half a million mortgage holders in Ireland have variable or tracker rates and are therefore vulnerable to higher interest rates.
People whose loans were sold by Permanent TSB — with the mortgages now being serviced by lenders like Pepper and Start — were recently told their rates have already risen to 6.5 percent, with some now at 7 percent.
They have no way to fix it, prompting consumer advocates to say they are “mortgage prisoners.”
Mr Makhlouf, who sits on the Governing Council, said this week that the ECB is expected to raise interest rates by 0.5 percentage point next week.
Such an increase increases the cost of repaying a €200,000 tracker with a term of 25 years by €50 per month. Over a year that makes 600€ extra.
Another increase in the ECB interest rate means that out of the four increases this year, the repayment costs for such a mortgage have increased by 2,900 euros.
Home prices have continued to rise despite rising mortgage rates and rising living costs, making home buying more difficult, but the rate of increase is slowing.
CSO figures show prices are up 9.8 percent in the year to October.
It is the first time in 14 months that the national price growth rate has been in single digits.
https://www.independent.ie/business/personal-finance/property-mortgages/how-much-is-your-house-worth/property-prices-rise-in-tandem-with-loan-rate-increases-and-that-is-before-ecbs-new-hike-42220454.html Property prices are rising in tandem with lending rate hikes – and that’s ahead of the ECB’s new rate hike