07 APR 2011
By Charlie Weston | Irish Independent
HOMEOWNERS are bracing themselves for the first in a series of interest rate rises that will increase the pressure on family budgets.
The 23-member European Central Bank governing council, headed up by Jean-Claude Trichet, is set to meet in Frankfurt today when it is widely expected to start the rate-rising cycle by pushing rates from 1pc to 1.25pc.
A rise in rates means that more than half-a-million homeowners with trackers will see their mortgage repayments automatically rise.
A survey of economists across Europe has predicted that the ECB will hike rates three times before the end of the year.
Three increases of 0.25pc each will add €45 to the monthly repayments on every €100,000 borrowed. Tracker holders, some of whom have rates which are set at just 0.75pc above the ECB rate, have benefited from rates being unchanged since May 2009.
Some 200,000 people with variable rates are also set to be hit as under-pressure lenders are expected to pass the full ECB rise on to their customers.
Already this year variable rates have gone up for mortgage customers of Permanent TSB, Irish Nationwide, EBS, Haven and Ulster Bank.
A number of banks have also hiked the cost of fixing mortgages, with at least three lenders shutting off the options of customers locking into a fixed rate.
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