Brussels: The European Central Bank (ECB) raised interest rates by 0.5%. The fourth rate hike since July means the latest ECB interest rate hike, the fourth this year, has now raised interest rates from zero to 2.5 percent in just six months. The central bank for the 19-nation euro zone has now raised its key rates four times.
After raising interest rates by 0.5 percentage points today, President Christine Lagarde says the ECB will keep increasing rates at a steady pace to ensure inflation returns to its 2% target.
— European Central Bank (@ecb) December 15, 2022
Watch the full press conference https://t.co/KGIAqnzshY pic.twitter.com/4E2y9K6pWG
Borrowing costs for mortgage holders are expected to rise again after the European Central Bank (ECB) raised its key lending rate on Thursday. This increases the pressure on mortgage-holders.
Every 0.5 percentage point increase in European rates adds around €25 to monthly repayments for every €100,000 outstanding on a typical tracker mortgage. This is €300 in additional repayments per year. The cumulative impact of four rate increases on a typical €200,000 tracker over a 25-year period would be close to €3,000.
The new increase in rates will initially only affect Tracker mortgage customers, who will automatically pass on any such increase as part of their contract. However, this will not have an immediate impact on variable rate customers.
Frankfurt also published new forecasts, expecting inflation to stay above its 2 percent mark for the next three years to 2025, driven by a number of factors, including Russia's invasion of Ukraine and the impact of the pandemic. European economies are under inflationary pressure as economies reopen after the Covid-19 pandemic, driven by supply disruptions and fueled by Russia's invasion of Ukraine, which has fueled energy costs.
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