Carlow variable mortgage holders facing higher repayments after highest ever rate increase

The European Central Bank has raised its key interest rates by a record 75 basis points this afternoon and has signaled that further hikes are on the way. 

The interest rate hikes will increase repayments for over 400,000 tracker and variable mortgage holders in Carlow and across Ireland.

The move is seen as a key step in the fight against inflation even as the euro zone economy is most likely heading for a winter recession.

The ECB confirmed that it has lifted its deposit rate to 0.75% from zero and raised the main refinancing rate to 1.25%. This is their highest level since 2011.

The increases come in the midst of a cost of living crisis and ever-rising energy charges. 

People in Carlow urged to take on a hill for Jack and Jill this October

The increase on Thursday comes after the ECB hiked rates by 50 basis points in July, its first increase in over a decade.

"Over the next several meetings the Governing Council expects to raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations," the ECB said in a statement.

Watch the ECB press conference live: President Christine @Lagarde explains today’s monetary policy decisions https://t.co/zHekKS3NWz

— European Central Bank (@ecb) September 8, 2022

In light of the anticipated news, Labour finance spokesperson Ged Nash said the Government has no option but to support Labour’s legislation to cap mortgage interest rates in Ireland.

"People are already being hammered by the cost of living crisis. So the news that rates will go up by 0.75 percentage points will come as another body blow to households who are already struggling to make ends meet,"  Deputy Nash said. 

"For example, a family with an average €200,000 tracker rate, over 25 years could soon be forced to pay up to €1,400 more in annual mortgage repayments.

“And this is only be the beginning - there is a very real possibility that interest rates will continue to rise and rise. The Government must urgently get a grip on rising rates and not play catch-up again as they have with our energy cost crises.

“The Labour Party has the legislation to take the heat out of this and to relieve some of the financial pressure people. Our Central Bank Variable Rate Mortgages Bill would enable the regulator to impose caps on mortgage interest rates charged by the banks where a market failure is shown.

"The legislation draws inspiration from a Bill tabled by the Minister for Public Expenditure & Reform, Michael McGrath when he was Fianna Fáil spokesperson on Finance. If his Bill was necessary when he was in Opposition and in an era of low interest rates, he surely must agree that it is needed now with two further ECB interest rate hikes on the way.

"The Oireachtas has already imposed a cap on the interest rates on moneylenders, so there is a strong precedent for action. This shows there is no constitutional impediment to enable the Central Bank to intervene in the market and introduce reasonable caps on interest rates charged by financial services providers. The only impediment is a lack of political will.

"With the second highest mortgage interest rate in the eurozone, Ireland is already well out of sync with our EU peers. Now is the time to send a strong message to the banks that they must quickly chart a course towards the EU average of mortgage interest rates.”

"The Government must do all they can to cushion this body blow. A cap on mortgage interest rates will save families thousands of euros over the lifetime of their mortgages and keep more money in people’s pockets this winter," Deputy Nash said.