Thursday 14 December 2017

What will the ECB rate rises mean to your mortgage?

The ECB headquarters in Frankfurt
The ECB headquarters in Frankfurt

THE Independent Mortgage Advisers Federation (IMAF) has done the sums to show how much more you will pay for your mortgage if the ECB rate rises.

The figures assume that the ECB rate increases by 0.5 per cent to 1.5 per cent by the end of this year -- and by another 1 per cent to 2.5 per cent next year. The figures also assume that lenders pass on the full extent of the ECB rate rises to standard variable customers. (ECB rate rises are automatically passed on to tracker customers.)

€200,000 MORTGAGE

€2,200 a year more

If you've a 25-year standard variable mortgage of €200,000 with Permanent TSB, your mortgage repayments work out at €1,191 a month.

If the ECB rate increases by 0.5 per cent, your monthly repayments will increase to €1,251 -- another €60 more a month, according to Michael Dowling of IMAF. If the ECB rate hits 2.5 per cent by the end of 2012, the interest rate on your mortgage will soar to 6.69 per cent. This will push up your mortgage repayments to €1,374 a month -- €183 a month more than you're currently paying. At that rate, you'll pay almost €2,200 more a year for your mortgage.

€200,000 TRACKER

€1,836 a year more

The average tracker rate is about 2 per cent, according to Dowling. Under that rate, the monthly repayments on a 25-year mortgage of €200,000 work out at €848.

If the ECB rate increases by 0.5 per cent this year, your tracker rate will increase to 2.5 per cent -- and this will push up your monthly mortgage repayments by €49 to €897, according to Dowling. If the ECB rate increases by another 1 per cent to 2.5 per cent by the end of 2012, your monthly repayments will increase to €1,001 -- €153 more (or an extra €1,836 a year) than you're currently paying.

€600,000 MORTGAGE

€6,588 a year more

If you've a 25-year standard variable mortgage of €600,000 with Permanent TSB, your monthly mortgage repayments are currently €3,574, says Dowling.

If the ECB rate increases by 0.5 per cent this year, your repayments will jump to €3,753 -- €179 more a month. If the ECB rate hits 2.5 per cent by the end of 2012, your repayments will climb to €4,123 a month -- €549 more than you're currently paying, says Dowling. So an ECB rate of 2.5 per cent could increase your mortgage bill by a whopping €6,588 a year.

€600,000 TRACKER

€5,532 a year more

If you've a 25-year tracker mortgage of €600,000 and the interest rate on your loan is 2 per cent, your monthly mortgage repayments are currently €2,542.

If the ECB rate increases to 1.5 per cent this year, your monthly mortgage repayments will increase by €149 to €2,692, according to Dowling.

If the ECB rate increases to 2.5 per cent by the end of 2012, your monthly mortgage repayments will increase to €3,004 -- €461 a month more (or €5,532 a year more) than you're currently paying.

Sunday Indo Business

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