The European Central Bank has raised its interest rates for the 10th straight meeting in-a-row, with the latest increase of 0.25% leaving its main lending rate at 4.5%.
The ongoing increases since last July are designed to curb inflation across the euro zone but will result in more pain for those on tracker mortgages who will see their monthly bills rise as a result.
People in the market for homes, those coming off fixed rates and borrowers whose mortgages are held by mortgage services providers will also be impacted by the rate increase in the months ahead.
In what will be a silver lining to those affected, the ECB suggested that rates had now reached their peak and if they are “maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.”
Markets and economists expect the policy tightening move to be the last and now anticipate a lengthy pause, followed by rate cuts in the second half of the year.
Each quarter-point increase adds about €25 to monthly repayments on a tracker mortgage with a 1% margin over the ECB rate and has €200,000 outstanding,
There are around 315,000 tracker mortgage and variable rate mortgage holders and in around a quarter of a million borrowers on fixed rates which are in place for less than three years.
Many of the latter group will be exiting these fixed rates in the near future and face much higher rates than they are accustomed to.
The ECB also lifted its deposit rate to 4% from 3.75%, taking it to an all-time-high.
