Look away now: More bad news as mortgage interest rates rise
Those six dreaded words have been all over the media again this morning: "Jean-Claude Trichet" and "interest rate hike".
The European Central Bank president is set to make an announcement in Frankfurt this morning in which he will signal a second hike in the ECB’s interest rate in the space of 12 weeks.
The rate is set to rise from 1.25% to 1.5%, as the bank bids to slow down economic growth in the biggest economies in the European Union, most notably Germany – conveniently leaving aside that interest rate rises are the last thing needed by the crisis economies of ourselves, Greece and Portugal.
The measure is bad news for 600,000 Irish mortgage-holders on tracker and standard variable rate home loans.
The rate hike will be passed on immediately to the 400,000 tracker holders in Ireland, equating to a rise of €15 every month per €100,000 outstanding.
Combined with the rate hike in April, that means the holder of a €300,000 tracker mortgage will be paying €90 more this month than they were in March.
For the 200,000 standard variable rate mortgage holders in Ireland, the rate is almost certain to be passed on – although there is a 30-day respite as the lenders must give notice of their intention to raise their interest rates.
Those on the books of AIB and Bank of Ireland could be hit on the double - the two main banks opted against passing on the interest rate rise in April but reports this morning suggest that they will impose a double-hike on the back of the latest intervention of the ECB.
In the car on the way into Dublin this morning, at the 19th mention of “Jean-Claude Trichet” and “interest rate hike” we lost the will to live and flicked over to Lyric FM.
A bit of classical music can’t do anyone any harm, can it? Anyway, this track soothed our headache, so hopefully it has a similar effect on you.
[Main picture via Wikimedia Commons]