Skip to main content

ECB Rate Hike For Irish Homeowners...

ECB interest rate hike to affect over 75% of Irish homeowners...

THE EUROPEAN Central Bank (ECB) raised its main lending rate by a quarter of a point to 1.25 per cent yesterday in a move that will add about €40 on to the monthly repayments of a person with a €300,000 tracker mortgage.

The announcement marks the first time in more than two years that tracker mortgage holders will feel the pinch of rising interest rates and it is expected to be the first of at least three rate increases over the next 12 months.

It will see the cost of mortgages climb for more than three-quarters of Irish homeowners. For every €100,000 owed on a 30-year tracker mortgage of 1.5 per cent plus the ECB rate, a quarter point increase adds about €13 on to the monthly repayments.

As a result of the ECB announcement, a person with a €300,000 tracker will see their monthly repayments rise by about €480 annually while someone with a €400,000 mortgage will have to pay a further €52.50 monthly, or €630 each year.

Speaking after the announcement was made, and using language that usually means another rate increase is in the offing, ECB president Jean-Claude Trichet said the bank would “continue to monitor very closely all developments with respect to upside risks to price stability”.

He insisted the ECB’s governing council had not decided that yesterday’s increase would be “the first in a series” but analysts suggested another rate hike is likely in June or July rather than May.

Mr Trichet also dismissed suggestions that the rate hike would increase pressure on Ireland and other so-called “periphery” euro zone states and said the decision was not intended to help or hurt any one country but to maintain price stability to benefit “directly and indirectly all 331 million citizens in the single currency area”.

“We do what we have to do even when it is difficult and not necessarily pleasing to everyone, that’s our job,” he said. Referring to peripheral countries, he said: “It is in their interests to follow their plan. They have to do what is necessary and they have the means to do so.”

Mr Trichet indicated he did not support any Irish proposals to include private bondholders as part of a rescue plan, saying that those who suggest such measures should “reflect on the confidence of the market”.

He denied that the bank’s economic policy was dictated more by the needs of Germany, the euro zone’s largest economy, than by smaller peripheral countries and said that the ECB was sticking to its rulebook and that euro zone member states should stick to the austerity plans they have agreed.

Bank of Ireland and ICS Building Society were first out of the blocks in confirming that as a result of the increases, all tracker rates will go up by the same amount from Wednesday, April 13th.

The bank and building society also announced increases to their fixed rate mortgage product range ranging from 0.7 per cent to 1.3 per cent across fixed rates for owner occupiers and buy to let customers.

RATE RISE MONTHLY INCREASE

ECB tracker mortgage of 2.25% over 30 years after rate rise

€100,000 + €12.63

€200,000 + €25.25

€250,000 + €31.57

€300,000 + €37.88

€400,000 + €52.50

Typical standard variable rate of 4.25% over 30-year loan after rate rise

€100,000 + €14.52

€200,000 + €29.05

€250,000 + €36.31

€300,000 + €43.57

€400,000 + €58.10


Report by CONOR POPE and DEREK SCALLY - Irish Times

Popular posts from this blog

Ireland's Celtic Tiger Excesses...

'Bang twins' may never get to run a business again... POST-boom Ireland is awash with cautionary tales of Celtic Tiger excesses, as a rattle around the carcasses of fallen property developers and entrepreneurs will show. Few can compete with the so-called Bang twins for youth, glamour and tasteful extravagance. Simon and Christian Stokes, the 35-year-old identical twins behind Bang Cafe and exclusive private members club, Residence, saw their entire business go bust with debts of €9m, €3m of which is owed to the tax man. The debt may be in the ha'penny place compared with the eye-watering billions owed by some of their former customers. But their fall has been arguably steeper and more damning than some of the country's richest tycoons. Last week, further humiliation was heaped on them with revelations that even as their businesses were going under, the twins spent €146,000 of company money in 18 months on designer shopping sprees, five star holidays and sumptu

Property Tycoon's Dolce Vita Ends...

Tycoon's dolce vita ends as art seized... THE Dublin city sheriff has seized an art collection and other valuables from the Ailesbury Road home of fallen property developer Bernard McNamara. The collection will be sold to help pay his debts. The sheriff, Brendan Walsh, is believed to have moved against the property developer within the past fortnight, calling to his salubrious Dublin 4 home acting on a court order to seize anything of value from his home to reimburse his creditors. The sheriff is believed to have taken paintings from the family home along with a small number of other items. The development marks a new low for Mr McNamara, once one of Ireland's richest men but who now owes €1.5bn . The property developer and former county councillor from Clare turned the building firm founded by his father Michael into one of the biggest in Ireland. He is the highest-profile former tycoon to date to be targeted by bailiffs, signalling just how far some of Ireland's billionai

I fear a very different kind of property crash

While 80% of people over 40 own their own home just a third of adults under 40 do. This is disastrous for social solidarity and cohesion Changing this system of policymaking requires a government to act in a way that may be uncomfortable for some. Governments have a horizon of no more than five years, and the housing issue requires long-term planning. The Department of Public Expenditure and Reform was intended to tackle some of these problems. According to its website its remit is to “drive the delivery of better public services, living standards and infrastructure for the people of Ireland by enhancing governance, building capacity and delivering effectively”. So how is the challenge of delivering homes for people in 2024 and beyond going to be met? The extent of the problem is visible in the move by companies, including Ryanair, to buy properties to house staff. Ryanair has, justifiably, defended its right to do so. IPAV has long articulated its views on how to improve supply an