Mortgage holders urged to check interest rates
Following today's interest rate increase of 0.25% by the ECB, consumer director of the Financial Regulator, Mary O'Dea has warned mortgage holders to check if the increase will be passed on to them.
"Clearly the rise in interest rates may mean increased costs for loans in the future so it is more important than ever to shop around for the lowest interest rates on all of your loans," she said.
"If you have a standard variable rate mortgage, your rate may or may not change with today's announcement of an increase in the ECB rate. Check to see how your lender responds to this interest rate rise. If you have a tracker mortgage, it is designed to keep your rate tied to the ECB rate, so any changes in the ECB rate will be passed on to you. For example, your tracker mortgage may be set at 1% above the ECB rate. So, if it was previously at 3%, it will now increase to 3.25%."
Today's increase of 0.25% would increase repayments on a 25-year €200,000 mortgage by about €25 per month. Consumers should also be aware that today's rate change may impact on their variable rate personal loans.
