European Central Bank Raises Interest Rates, Adding Hundreds to the Cost of Tracker Mortgages

The European Central Bank (ECB) has increased its interest rates by 0.25%, in a bid to tackle euro zone inflation. The announcement, which was widely anticipated, takes the key ECB rate to 3.75%, resulting in hundreds of euros added to the annual cost of tracker mortgages. This increase follows six previous rate hikes, which have caused thousands of euros in additional repayments for tracker mortgage holders. For instance, a 0.25% increase can add some €13 of monthly repayments for every €100,000 borrowed. The average repayment for tracker holders has risen from €951 to €1,356, with fresh hikes expected in the coming months. The ECB stated that the inflation outlook remains “too high for too long” and that “underlying price pressures remain strong”. Trevor Grant of the Association of Irish Mortgage Advisors (AIMA) warned that the increase could be the “straw that breaks the camel’s back” for many borrowers, adding that it risked pushing more borrowers into mortgage arrears.