The potential for two interest rate hikes this year will affect hundreds of thousands of Irish mortgage borrowers for the first time in a decade, including those on short-term fixed rates and trackers, the senior broker said Michael Dowling.
Last week, ECB President Christine Lagarde turned unexpectedly hawkish on inflation and, in a reversal, refused to rule out an interest rate hike later this year if soaring oil prices energy took root in the euro zone.
Mr Dowling, who has held senior positions in the mortgage industry, said Ms Lagarde’s comments marked the start of a “psychological shock” for almost all mortgage holders.
Financial markets expect the Bank of England and the US Federal Reserve to set the pace for rate hikes and the ECB to follow to raise interest rates twice later this year as the evidence mounts. accumulate that inflation is here to stay.
A single quarter-point hike adds around €40 to the monthly interest bill on a €300,000 mortgage, Mr Dowling said, and if the ECB were to start raising rates it would likely follow with d other rate hikes, as has been the case. the case of the Bank of England.
He said three-year fixed-rate borrowers shouldn’t automatically assume they can’t switch to a longer fixed rate.
Meanwhile, there has been further confirmation that energy-fueled inflation is spilling over to food, albeit at a limited pace.
Market researcher Kantar said Irish grocery prices, in the 30,000 items it regularly monitors, rose 1.7% a year in its latest survey. This is the fastest increase since October 2020, according to Kantar, a rate that matches the 1.6% inflation for food and non-alcoholic beverages reported by the CSO last month.
News was better in the wholesale oil and gas markets. The price of European wholesale gas for delivery in March, April and May fell more than 6% yesterday afternoon as French President Emmanuel Macron traveled to Moscow for talks on Ukraine.
And the price of Brent crude has returned to $92.65 a barrel amid signs of progress in nuclear talks between the US and Iran, which could lead to the lifting of US sanctions on oil supply. Iranian oil.