Commenting on the ECB decision to keep its interest rates unchanged, Brokers Ireland said it will come as a relief to worried mortgage holders who have been in trepidation fearing further increases.
“At long last some sense has prevailed. Since it takes eighteen months, at least, before the impact of interest rate increases emerge it could be some time before we know the impact of the ten increases that have already taken place, we simply don’t know what damage has already been done with the aggressive interest rate hikes that have taken place since July 2022,” Rachel McGovern, Director of Financial Services at Brokers Ireland, said.
She said those most impacted are those on variable and tracker rates, but also those on short-term fixed rates.
“But while tracker mortgage holders are at minimum 15 years into their mortgages they will have benefitted from years of lower rates. Not so, however, for those who have new mortgages in recent years, about 80 percent of whom chose fixed rates, and the fixes are generally for short periods,” she said.
There are about 315,000 tracker and variable rate mortgage holders, and 400,000 plus mortgage borrowers on fixed rates, of which over six in ten are fixed for less than three years.
“These latter mortgage holders will be coming out into a much higher interest rate environment, likely one they never anticipated,” Ms McGovern added.
She said while the ECB has stalled, at least for the moment, we don’t know what Irish lenders may do. They have generally not passed on in full the ECB increases.
“With the impact of the cost of living on top of increased interest rates, some mortgage holders are under severe pressure.
“To those who have concerns we would advise that it’s important to act and not ignore the situation if you are struggling. Financial Brokers can help you put a financial plan in place and support you in interacting with your lender to come to a sustainable solution,” she said.
