November 21, 2023
Debt and Asset Recovery Legal Secretary
We are looking for an experienced Legal Secretary to join our busy and friendly Debt and Asset Recovery Team, based in Dublin 2. Responsibilities will include but are not limited...
In July, the European Central Bank (ECB) made the decision to increase mortgage rates for the first time in over a decade.
At the time, the ECB warned against the likelihood of further increases which duly happened, as interest rates rose by 75 basis points the beginning of September. This increase lifts the ECB’s benchmark deposit rate to its highest level since 2011.
Unsurprisingly inflation has been cited as the driving force behind these increases. ECB President Christine Lagarde has confirmed that there will be more rate rises in the coming months. The ECB has reiterated its desire to not allow inflation to remain above the bank’s target of 2% – inflation is currently at a record high of between 8% and 9% – and it is believed that higher rates will help to temper the ramifications of inflation, ultimately reducing it to 2%.
Despite the continued ECB rate hikes, the mortgage rates in Ireland have fallen in the last four months. New Irish mortgage agreements in July showed an average interest rate of 2.63% – down 10 basis points on July 2021 figures according to the Central Bank.
It is estimated that between 400,000 and 500,000 mortgage holders in Ireland will be impacted by the increase in mortgage interest rates – in effect, through greater mortgage repayments – and these consequences will be felt in both the short and medium term.
Tracker mortgage holders will be most affected, such is the nature of these mortgages, whilst those holding variable mortgages could too be affected, albeit not necessarily in the immediate future. For those seeking mortgages, it remains to be seen how they will be impacted, yet potential difficulties are posed by greater repayments.
Irrespective of mortgage type, major lending institutions across the country have sought to quell the anxiety over these increases by reassuring customers that any rate changes will be communicated to them.
About the author: Greg Flanagan, Partner on the Property Team.
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