Responding to the ECB interest rate increase of 0.5%, Brokers Ireland said the increase “marks the beginning of a new era, and predicting where the rate will end up with any degree of accuracy is like fortune telling”.
Rachel McGovern – Director of Financial Services at the organisation, which represents 1,225 broker firms – said: “Ten years ago, hardly anyone believed or foresaw that the ECB interest rate would drop to zero as it did in 2016, or that it would maintain at this level until now.
“We are not in the business of fortune telling, and mortgage holders and aspiring mortgage holders have to live their lives and make decisions now in this increasingly uncertain world. Therefore, our advice to mortgage holders who have not reviewed their situation is do so immediately and take professional advice. There are still very good long-term fixed interest rates in the market, which mean that people can plan their financial affairs knowing what their financial outlay will be over the longer-term, for periods up to thirty years”.
She said as the months go by, these rates, which have been reducing in recent years, are likely to increase. While this would not impact on people who “have already fixed”, it would impact new mortgage holders”.
Ms. McGovern added that an unfortunate aspect of increasing interest rates is that it will impact aspiring home buyers, especially those on average incomes, who will now have to plan for increased repayments and the likely higher stress testing by lenders.
She said the ECB rate increase will mean an automatic increase for anyone on a tracker mortgage. Although no tracker mortgages have been issued since 2008, over 200,000 people will see the 0.5% increase applied to their monthly repayment.