{"id":494228,"date":"2026-06-11T12:17:10","date_gmt":"2026-06-11T12:17:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/494228\/"},"modified":"2026-06-11T12:17:10","modified_gmt":"2026-06-11T12:17:10","slug":"ecb-rates-announcement-live-hike-expected-as-irish-households-to-face-higher-costs-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/494228\/","title":{"rendered":"ECB rates announcement live: Hike expected as Irish households to face higher costs \u2013 The Irish Times"},"content":{"rendered":"

Main PointsEuropean Central Bank<\/a> (ECB) leaders meet in Frankfurt today to discuss raising interest rates, with a 0.25 hike widely expected. Investors are currently pricing in two quarter-point rate rises this year, which would lift borrowing costs in the euro zone to 2.5 per cent, the highest level since March 2025. Key Reads<\/p>\n

Conor Pope – 0 minutes ago<\/p>\n

ECB confirms rate hike of 0.25%<\/p>\n

There you have it. It has just been confirmed that the ECB has raised its key deposit rate by a quarter of a percentage point to 2.25 per cent. It is the first increase in almost three years and comes as the Iran war is having a broader impact on inflation than the spike this year in energy prices. The bank also increased its main lending rate, to which ECB tracker mortgages costs are linked to 2.4 per cent. <\/p>\n

The reaction has already started to come in. <\/p>\n

\u201cToday\u2019s rate hike was widely expected. But the bigger question now is how many more increases we can expect over the coming months,\u201d said Daragh Cassidy of bonkers.ie.<\/p>\n

\u201cAt 3.2 per cent, inflation in the Eurozone is already well above the ECB\u2019s 2 per cent target and that\u2019s even before the full effects of the current energy supply shock have filtered through to the economy. As a result, there\u2019s a strong possibility the ECB will raise rates again before the end of the year.\u201d<\/p>\n

He said that \u201cmuch will depend on developments in the conflict with Iran. The longer the conflict continues, the greater the potential impact on energy prices and inflation, increasing the likelihood of further rate hikes.\u201d <\/p>\n

Cassidy noted that current inflationary pressures \u201care largely the result of a supply-side shock rather than excessive consumer demand. So you could question how effective higher interest rates will be in bringing inflation back under control. However, the ECB doesn\u2019t see it that way.\u201d<\/p>\n

As to the impact, as we have been saying \u201canyone on a tracker mortgage will feel the impact almost immediately,\u201d he continued. <\/p>\n

\u201cAlthough the number of tracker customers has gradually declined over the years, there are still likely to be more than 100,000 tracker mortgages in Ireland. These borrowers will see their mortgage rate increase by a quarter of a percentage point within the next month or so. Tracker mortgages are linked to the ECB\u2019s slightly higher main refinancing rate, which will rise to 2.40 per cent from 2.15 per cent.\u201d<\/p>\n

He said someone with \u20ac150,000 remaining on their tracker over 10 to 15 years, their repayments will increase by roughly \u20ac17 or \u20ac18 a month, or just over \u20ac200 per year.<\/p>\n

\u201cBorrowers on fixed-rate mortgages are protected for now, as their repayments won\u2019t change until their fixed term expires. However, lenders may increase their fixed rates for new customers in the coming weeks, particularly if the ECB raises rates again at its next meeting in July,\u201d he continued.<\/p>\n

He pointed out that in recent weeks \u201csome of the smaller non-bank mortgage providers have already increased their rates. These lenders are more sensitive to changes in wholesale funding costs, as they rely more heavily on financial markets to fund their mortgage lending.\u201d<\/p>\n

\u201cThe main banks such as AIB, Bank of Ireland and PTSB, are less exposed because they fund a significant proportion of their lending through customer deposits. However, rate increases from these lenders later in the year can\u2019t be ruled out, particularly if the ECB continues to tighten monetary policy,\u201d Cassidy concluded. <\/p>\n

Conor Pope – 12 minutes ago<\/p>\n

Irish rates eased slightly in April <\/p>\n

Ahead of the ECB announcement, it is worth looking at where we stand when it comes to mortgage rates. They remained broadly steady in April, according to data from the Central Bank that was published yesterday. <\/p>\n

The average mortgage rate for April was 3.50 per cent which was down slightly from the 3.52 per cent that was recorded in in March, and just above the Eurozone average of 3.45 per cent. <\/p>\n

Rates in the Eurozone ranged widely from as low as 2.01 per cent in Malta to as high as 4.28 per cent in Latvia.<\/p>\n

It is worth bearing in mind that mortgage rates are likely to increase over the coming months.<\/p>\n

Conor Pope – 19 minutes ago<\/p>\n

Inflation closer to home eases marginally ahead of ECB movesThe rate of inflation dipped fractionally, to 3.6 per cent last month as energy inflation slowed, but rising costs continued to put pressure on consumers and push up the cost of living, reports Ciara O\u2019Brien.<\/p>\n

The consumer price index had hit 3.7 per cent in April, the highest since early 2024.<\/p>\n

Data from the Central Statistics Office showed inflation was fuelled by education charges, which rose 8.9 per cent over the past 12 months, and clothing prices, which increased by 7.4 per cent. <\/p>\n

The increase in education costs was associated with a change in third-level education charges that came into effect in October last year. <\/p>\n

Housing, water, electricity and gas rose 7.1 per cent over the same period. <\/p>\n

Only the furnishings, household equipment and routine household maintenance subsector showed a decline, falling 0.6 per cent compared to the previous year. <\/p>\n

Excluding energy and unprocessed food, the core consumer price index rose by 2.9 per cent over the year, the CSO said.<\/p>\n

Conor Pope – 46 minutes ago<\/p>\n

Why are rates so important in Frankfurt?<\/p>\n

Wondeing what is behind the ECB moves? <\/p>\n

Wonder no more.<\/p>\n

Cliff Taylor writes that when a policy was being discussed at cabinet, the story goes, then taoiseach Garret Fitzgerald – well-known for his tendencies too be a bit of a boffin – was said to have observed :” That\u2019s all very well in practice, but how does it work in theory. ” <\/p>\n

It may well be apocryphal, though borrowers may have similar feelings about the ECB increase. <\/p>\n

How can a central bank have any influence, after all, on the conflict on the Middle East and its impact on oil prices, which is the main factor driving inflationary pressures. <\/p>\n

The theory accepts that this is the case, but argues that the ECB needs to act to limit the resulting spread of inflation elsewhere in the economy. <\/p>\n

Higher interest rates, by acting as a brake on economic activity, should lower demand and thus price pressures, particularly in areas like services which is a particular concern to the ECB. <\/p>\n

It also sends a message to the wider economy – this is meant to influence expectations of future inflation which in turn has an impact on the outturn.<\/p>\n

That, at least, is the theory. The risk for the ECB, particularly if the Gulf conflict worsens, is a period of \u201cstagflation\u201d with low growth and high inflation. <\/p>\n

Here managing inflation becomes more difficult because doing so further dampens already low growth, though it is worth noting that the ECB\u2019s primary mandate is to control inflation and keep it close to 2 per cent.<\/p>\n

\"EuropeanEuropean Union flags flutter in the breeze in front of the headquarters of the European Central Bank’s (ECB) headquarters as the sun shines in Frankfurt this morning. Photo by Kirill KUDRYAVTSEV \/ AFP via Getty Images What comes next?<\/p>\n

Analysis from global financial services firm and FX specialist Ebury says the big question is what comes next. <\/p>\n

Today\u2019s move is likely to be an \u201cinsurance\u201d hike rather than the start of a sustained tightening cycle, with policymakers expected to keep their options open and potentially pause through July before deciding whether another increase is needed after the summer.<\/p>\n

\u201cThe market reaction will be shaped by the extent of the forecast revisions and by any comments alluding to how high the bar is for the next hike \u2013 and when it could come,” said Roman Ziruk, Senior Market Analyst.<\/p>\n

\u201cThe current situation suggests the bank need not rush: barring a significant flare-up of the Iran war or surprisingly strong indications of second-round effects, the ECB can perhaps sit out the July meeting before deciding whether action is warranted in September. Markets are fully pricing in a move after the summer, and while we are not as convinced, we agree it could be on the table.\u201d<\/p>\n

Time to act is now say brokers<\/p>\n

Rachel McGovern of Brokers Ireland has said that when interest rate cycles change, they have the potential to deliver changes beyond merely the interest rates, the nature of mortgage products themselves can change. <\/p>\n

\u201cThe window to act in terms of getting the best rates is closing so we would be advising all mortgage holders who have not reviewed their position to do so now without delay,\u201d she said. <\/p>\n

\u201cWhen the market changed from historically low rates in mid-2022 onwards some of the better long-term fixed interest rate products were withdrawn from the market.\u201d<\/p>\n

The vast majority of new mortgage holders are opting for fixed rates with 92 per cent of new agreements, up from 81per cent a year ago, but large numbers will be coming off fixed rates this year, McGovern said. <\/p>\n

And while switching has certainly improved there are still too many mortgage holders who are not on the most advantageous rates.<\/p>\n

Tracker holders have had the wildest – and sometimes easiest – ride of the lot <\/p>\n

There is going to be a lot of talk of trackers today. <\/p>\n

Going way back to when that man on the bus exclaimed \u201cI don\u2019t know what a tracker is\u201d, Ireland\u2019s homeowning classes have been split between haves and have-nots.<\/p>\n

The haves had the trackers \u2013 mortgages tied to European Central Bank (ECB) interest rates \u2013 while the have-nots were on variable and fixed rates set by indigenous banks at levels they reckoned the market could bear, irrespective of whether or not they were equitable or affordable.<\/p>\n

For well over a decade the tracker holders were on the pig\u2019s back, paying rates of as low as 0.6 per cent and almost never more than 2 per cent. By contrast, variable and fixed-rate holders were routinely paying over 3 per cent, with some paying more than twice that, for home loans.<\/p>\n

Then, in July of 2022, things started to turn for tracker holders and it would be hard to exaggerate just how painful that turn was for many already struggling with a deepening cost-of-living crisis.<\/p>\n

A total of 10 ECB rate increases since the summer of 2022 took tracker rates up to an eye-watering 4.5 per cent and forced those with mortgage deals they were always told were as precious as gold to pay hundreds of euro more each month to their banks. <\/p>\n

Few had any change out of \u20ac3,500 when the interest hike impact was spread over a year while many were substantially worse off than that.<\/p>\n

Then things went into reverse and there were nine successive rate cuts and while tracker holders were still spending more than they once were, the financial pain eased considerably. <\/p>\n

For those of fixed and variable rates, the pain has been fairly consistent all the way through.<\/p>\n

What should borrowers do now? The IT Business podcast has the answers<\/p>\n

On the latest Irish Times business podcast, Michael Dowling of Irish Mortgage Brokers goes through what the rise in interest rates means for various types of borrowers. <\/p>\n

There are a few key messages. <\/p>\n

New buyers are clearly better to look at locking in – and might even consider longer terms than the typical three years. <\/p>\n

Those on old style variable rates would, in most case, save money by taking one of the fixed rate offers in the markets, as well as protecting themselves from possible rises as ECB rates go up. <\/p>\n

People on trackers will take a hit, though many will still be on rates around 3.25 per cent after the ECB increase, which is still OK by historical standards. Have listen here. <\/a><\/p>\n

Mortgage holders do hold some cards even when rates climb<\/p>\n

It is worth noting that even in an era of rising rates, people have options. <\/p>\n

As Martina Hennessy points out, the biggest risk for some borrowers isn\u2019t a rate rise itself but assuming they have no options. <\/p>\n

\u201cThe market currently remains competitive, with rates starting from 3 per cent and products rewarding those with lower loan to values. This means that homeowners who have seen the value of their home increase could be in a position to unlock more competitive rates.\u201c<\/p>\n

She says that mortgage holders value security and with the expectation that we could be facing into a period of upward rate movement \u201cone of the biggest changes we\u2019re seeing is homeowners on fixed rates who are no longer waiting until the term ends. They are engaging now to understand their options and see if a switch makes financial sense.\u201d<\/p>\n

And does it make sense?<\/p>\n

Well, she says that for some borrowers, reviewing their mortgage can deliver savings measured in thousands rather than hundreds of euro. <\/p>\n

As we have said a 0.25 per cent increase will add around \u20ac14 per month for every \u20ac100,000 borrowed over a 30-year term. <\/p>\n

\u201cFor the average mortgage of just over \u20ac360k, that equates to approximately \u20ac50 extra in repayments per month or \u20ac600 per year. And if rates rise three times, as predicted by some analysts, that\u2019s \u20ac1800,\u201d Hennessy says. \u201cYour existing lender should absolutely be part of the conversation, but it shouldn\u2019t be the only conversation.\u201d<\/p>\n

Fresh hikes likely to hurt even more <\/p>\n

There has been a lot of commentary coming in ahead of the ECB move. <\/p>\n

According to Martina Hennessy of online brokers doddl.ie, the latest round of rate increases is likely to hurt more than that last round which started in the immediate aftermath of Russia\u2019s invasion of Ukraine in the spring of 2022.<\/p>\n

\u201cThe average mortgage has increased by almost \u20ac80,000 in just three years,” she said. <\/p>\n

\u201cThat means the same rate increase today hurts more than it would have when rates began to increase in 2022 to curb inflation.\u201d<\/p>\n

She pointed out that \u201cnot all mortgage holders are equally exposed. The 130,000 tracker customers will feel any ECB increase first, followed by variable rate customers, while those coming to the end of low fixed rates could face higher repayments when their current term expires.\u201d<\/p>\n

What does a hike mean in cold hard cash terms?<\/p>\n

The quarter of a percentage point when it comes will bring financial pain to just over 100,000 tracker mortgage holders in Ireland almost immediately.<\/p>\n

Every 0.25 per cent increase adds around \u20ac14 on to the monthly repayments on a \u20ac100,000 outstanding and someone who has \u20ac200,000 left to repay can expect to be worse of by close to \u20ac30 a month or \u20ac300 over the course of a year. <\/p>\n

But that is only part of the story. If, as is widely expected, the ECB increases its rates on three occasions over the next seven or eight months, than many homeowners will be worse off by the guts of a grand annually. <\/p>\n

And it is not just tracker holders who have cause for concern. <\/p>\n

While tracker holders will feel the pain of a hike pretty much immediately, the banks will start increase their variable rates and their fixed rates for new customers. That means people in the market for homes, those coming off fixed rates and borrowers whose mortgages are held by mortgage services providers will also be impacted by the rate increase in the months ahead.<\/p>\n

ECB rate hike has been widely flagged for months<\/p>\n

At exactly 1:15pm the European Central Bank will announce that its rate rollercoaster has changed direction again after nearly two years of rate cuts which came after two years of rate increases. <\/p>\n

There was a time when ECB moves were as closely guarded as the Third Secret of Fatima but just as that secret was eventually revealed, so too have the plans of the ECB been exposed well ahead of time. <\/p>\n

What we know is a rate hike of 0.25 per cent is coming in response to inflation climbing across the EU. <\/p>\n

The bankers in Frankfurt have a magic number of 2 per cent when it comes to inflation and with the rate across the EU currently standing at 3.2 per cent (it is a little bit higher than that in Ireland) the ECB feels like it has to act. <\/p>\n

The smart money is on this being one of three rate increases before the end of the year but we will have to wait until later this afternoon to get a sense of the plans from the head of the ECB Christine Lagarde. <\/p>\n","protected":false},"excerpt":{"rendered":"Main PointsEuropean Central Bank (ECB) leaders meet in Frankfurt today to discuss raising interest rates, with a 0.25…\n","protected":false},"author":2,"featured_media":494229,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,12965,61,5232,60,16487],"class_list":["post-494228","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-european-central-bank-ecb","tag-ie","tag-interest-rates","tag-ireland","tag-mortgages"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/494228","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=494228"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/494228\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/494229"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=494228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=494228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=494228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}