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Mortgage holders bracing for higher costs as ECB set to start raising interest rates from next month..


MORTGAGE holders have to brace for higher costs after the European Central Bank signalled a change in policy that is set to hit those with variable and tracker rates.

The European Central Bank (ECB) is now set hike its key refinancing rate in July and again in September.

Two rises of 0.25pc have been indicated, but a rise of 0.50pc in September could be implemented if high inflation persists. This is likely to impact some 450,000 people who have a tracker or variable rate. And it will mean future fixed rates will become more expensive.

Each 0.25pc rise in the ECB rates will cost €30 more in monthly repayments for a €250,000 tracker mortgage. That works out at €360 a year. This is based on a tracker with a margin of 1.25pc over the ECB rate, with 20 years left to pay. If rates go up by 0.5pc it will cost this mortgage holder an extra €720 a year in repayments.

The ECB announced it is to end its bond-buying programme from July 1.

This is considered to be the first move before interest rates are increased later this summer. The ECB also announced it will increase interest rates by 0.25pc at its next meeting in July. In the meantime, it has left its interest rates unchanged.

Economist with KBC Bank Austin Hughes said the announcements signalled the start of a sequence of rate rises. Competition among lenders may mean that variable rates are not hiked by all lenders. But most are likely to push up home lending rates to reflect the higher ECB refinancing rate. There has been mixed news on mortgage rates recently.

Permanent TSB, Bank of Ireland and EBS all recently reduced some of their rates. But ICS Mortgages increased its rates twice over the past few weeks, and Avant Money increased some of its rates last month. It comes a day after the Central Bank of Ireland indicated that mortgage rates in this country bucked the trend by falling in April. Average rates for new buyers and switchers fell marginally to 2.77pc in April. This is down fractionally from 2.78pc in March.

This means this country has the second highest mortgage rates in the Eurozone, according to the Central Bank of Ireland. The average interest rate on a new mortgage in Ireland is second only to Greece in the 19-country Eurozone. But mortgage holders were warned that the European Central Bank is likely to signal at a meeting of its governing council on Thursday that it is about to reverse a decade-long policy and start raising its key lending rate.

Whether you are  looking to switch lender currently, a first time buyer or  moving home, should you have any concerns about the issues raised in this article,  or investing in a buy-to-let property, why not chat to a Seaspray Mortgage adviser today about finding the mortgage that’s right for you:

tel.+353 83 099 0442     or email


Seaspray Financial Services Ltd trading as Seaspray Mortgages is regulated by the Central Bank of Ireland with registered number C165527


This content is taken from a previous article published by on 09-06-22,written by Charlie Weston (


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