'Worry' that ECB rates increase will pile further pressure on mortgage holders

Concerns have been raised that mortgage holders could be facing a further interest rate increase later today, which would be the 10th increase since July of last year. 

The European Central Bank (ECB) has put up interest rates by over four percentage points since it began this round of rate increases as a mechanism to tackle inflation.

It is understood that a rate increase of 0.25% is under consideration. 

However, inflation actually rose last month in Ireland due to an increase in oil prices. 

There has also been some speculation that the ECB may pause its interest rates for this month, at least. 

A rate increase would see tracker and variable rate mortgage holders in Ireland face higher monthly repayments, on top of previous increases. 

Fianna Fáil MEP Billy Kelleher is urging the ECB not to announce a further interest rate rise when its Board of Governors meets today saying it will cause more damage than any possible benefit it may bring.

Kelleher, a member of the European Parliament’s Economic and Monetary Affairs Committee, was commenting ahead of a meeting today in Frankfurt where decision makers are discussing the possibility of a further 0.25% rate rise.

“I am incredibly worried that the nine previous rate rises caused a contraction in the European economy. While it is true that inflation has slowed and fallen back in many countries, this is not the case in Ireland, and it is abundantly clear that interest rate rises are causing a slowdown in growth rates. The most recent projected growth rates have been slashed from 1.4% to 0.8% for 2024 in the Eurozone, for example.

“The Irish Central Statistics Office has also indicated that mortgage interest rate rises are now a significant contributory factor to Irish inflation actually increasing again in recent months.

“Last month, I wrote to the ECB President expressing my concern about the impact of interest rate rises on households. I also questioned the parameters of the ECB mandate, focusing on the 2% price stability objective, and whether it could be interpreted in a manner that would allow greater consideration to be given to the impact on the real economy when the Board makes decisions. Ultimately, if the current mandate is too restrictive then we may need to go down the Treaty change route," Mr Kelleher said.