Summer rates rise to put borrowers under pressure
MORTGAGE holders were warned yesterday that interest rates will start rising as early as the end of the summer, in a move that will put thousands of homeowners under massive financial strain.
And home and motor insurance could cost the average family an extra €200 a year.
A surge in oil and food prices have forced a sharp rise in inflation across the eurozone, prompting fears of up to two European Central Bank rises by the end of this year.
A rise in September could be followed by another one in December, KBC Bank economist Austin Hughes said last night.
Two rises of 0.25pc each in the ECB rate would add €1,000 to the annual cost of repaying a €300,000 mortgage.
This is because every 0.25pc rise in interest rates adds €15 a month to the cost of repaying each €100,000 borrowed.
Some 400,000 people on tracker mortgages and another 200,000 who have standard variable rate mortgages will be affected by a rise in ECB rates.
Household finances are already reeling from a raft of increases, including the new universal social charge, income tax hikes, health insurance increases and petrol price rises.
And it has been predicted that home and motor insurance rises this year, due to the severe cold snap in December, are set to cost the average household an additional €200 a year.
Motor and household insurance costs have been surging for the past two years.
And, from today, VHI customers face hikes of €300 for an average family of two adults and two children. Aviva's premiums go up next month, while Quinn Healthcare hikes took effect from the start of the year.
Income tax changes from last month's Budget are also hitting households hard.