Tracker mortgage rates will rise for the third time this year as the European Central Bank (ECB) hiked interest rates by 0.75 percentage points. Policymakers decided to raise the ECB's rates by 75 basis points, less than a month after raising them in early September.
The ECB said inflation-driven interest rate increases were "too high" and would remain above its medium-term targets for the long term.
"The Governing Council has taken today's decision and is expected to raise interest rates further to ensure a timely return of inflation to its 2% medium-term inflation target,"
“In September, inflation in the euro area reached 9.9 percent. "In recent months, rising energy and food prices, supply disruptions and the post-pandemic demand recovery have led to widening price pressures and rising inflation," the ECB's spokesperson said.
The ECB's top-level meeting decided to raise rates by 75 basis points, the current hike comes less than a month after it was hiked in early September. The move is part of the ECB's latest efforts to control inflation as food and energy prices soar in the wake of Russia's war in Ukraine. The ECB added that further interest rate hikes are likely in the future as part of plans to reduce overall inflation.
With the latest increase, mortgage repayments will increase for customers on tracker mortgages, while it is unclear whether banks will increase variable rate mortgages. Bank of Ireland has confirmed tracker mortgage rates for its customers will increase by 0.75%.
The change is set to take effect from November 16 for most Bank of Ireland customers. A spokesman for Bank of Ireland said: “Customers do not need to take any action at this time. Bank of Ireland will confirm the new interest rate, effective date and their new repayment amount to all Tracker Mortgage customers. However, the spokesperson added that other mortgage products have not yet been decided and rates are under review.
According to economists, if the increase is passed in full, each percentage point increase in interest rates would add €83 to the monthly repayments of €100,000 for each borrower on a tracker mortgage or variable rate mortgage.
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