SO, THE ECB met in Frankfurt today, where, as expected, it increased interest rates for the seventh time since it began raising rates last summer.
We expected the ECB to raise rates by 25 basis points today and indicate, as they did, an intention to hike further which will bring further bad news for mortgage holders. At the moment it is expected that the ECB rate will top out at 3.75% so further rate increases are on the cards. My advice to all tracker rate holders is that they should review their existing terms. One key question that our clients have been asking is that with interest rates on the rise, is it advisable to abandon your tracker mortgage and move to a fixed rate? Certainly, the answer used to be a clear ‘no’, but now the answer depends on a number of factors:3.
The likely future trajectory of fixed rates also needs to be factored into your deliberations and calculations. If a global economic slowdown comes about and inflation moves back towards the ECB’s target 2% rate then the ECB may cut rates again. To fix or not to fix The interest rate hike is not just affecting those on a tracker mortgage. Variable rate mortgage holders can often feel like the most vulnerable in the market to the increasing ECB rises but so far, on the back of the ECB increases, Irish banks have focused more on increasing fixed rates. This might be about to change.
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