Irish households set for mortgage hikes as ECB plan to increase rates

The European Central Bank (ECB) is expected to indicate today that it will be raising interest rates by a quarter of one per cent from July.

The ECB move is an attempt to dampen inflation which is running at over 8 per cent in the eurozone, way above the bank’s target of just 2 per cent.

Economist Jim Power believes a number of interest rate rises are on the cards.

Mr Power told Newstalk: “I think we’ll see another quarter of one per cent increase in September, and it’s not going to end there. I would expect over the next 12 months in total ECB interest rates are likely to increase by around 2 per cent.”

Mortgage adviser Michael Dowling said that the two ECB rate hikes, leading to a half a point increase in mortgage rates, would add €80 a month to the cost of households servicing a mortgage.

This will amount to €960 for a full year and the increases are likely to hit up to 740,000 Irish households.