The European Central Bank imposed an increase of 0.75 percent

THE European Central Bank has dealt a serious blow to mortgage holders with an increase in mortgage lending.

Racker mortgage holders will be hit with higher payments starting next month.

This comes weeks after they received letters from their banks telling them that the ECB’s rate hike in July will boost their repayments.

The governors of the European Central Bank have raised interest rates by 0.75 percentage points.

There are nearly half a million tracker or variable rate mortgage account holders who are vulnerable to higher European interest rates.

The decision to increase it by 0.75 percentage points means tracker mortgage holders face an additional €34 in higher payments for every €100,000 they owe, according to calculations by MyMortgages.ie agent Joey Sheahan.

This is based on a tracker margin of 1 percent above the ECB interest rate, with 15 years left.

Seen over a year, the additional costs amount to 408 €.

Last month’s surge means the two rate hikes will add an additional €800 a year for every €100,000 left to repay.

This means that a family with a €200,000 mortgage will increase repayments by more than €1,600 over the course of a year.

The big three banks spared adjustable-rate customers ahead of the ECB’s July hike, but that’s unlikely to happen this time around.

Adjustable-rate customers with a 25-year, €200,000 mortgage face an additional €78 in monthly repayments for a 0.75 percentage point increase.

Over a year, this is an additional €930 in mortgage costs.

Daragh Cassidy of price comparison site and mortgage broker Bonkers.ie said the latest rate hike was expected.

“But that doesn’t make it any easier to digest. The question now is how high will interest rates rise?”

He said when the ECB hiked rates in July, the big banks here chose not to pass on the rate hike to their variable and new fixed-rate customers.

“I’m not sure we’ll be as lucky this time.”

Meanwhile, the pace of inflation slowed in August, but remains extremely high, according to the latest data from the Central Statistics Office.

The Consumer Price Index (CPI), a standard measure of household price inflation, rose 8.7 percent in the year to August 2022.

That pace has slowed from an annual increase of 9.1 percent in the year to July 2022, but for the 11th straight month the annual increase has been at least 5 percent and above, dramatically higher than the norm in recent decades.

Higher energy costs are the big driver of utility bills and are leading to the largest increase in household bills.

The CSO said electricity costs rose 38.1 percent on an annualized basis in August.

Gas prices rose 56.1 percent, and heating oil rose 73 percent.

https://www.independent.ie/business/personal-finance/property-mortgages/european-central-bank-imposes-bumper-075pc-rise-41971749.html The European Central Bank imposed an increase of 0.75 percent

Fry Electronics Team

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