Pledge to aid mortgage holders

THE Government has pledged to help mortgage holders in difficulty as fears mount many more could be plunged into arrears.

Tánaiste Eamon Gilmore said the Government is looking at options to help homeowners that include increasing mortgage interest relief. He said the Government is also hoping to get banks to cut costs so they can absorb rate increases.

Homeowners have been told it is probably now too late to fix their mortgage rate as many banks have priced themselves out of the market.

This means that mortgage holders will be at the mercy of the European Central Bank (ECB) and their own bank when it comes to rate increases.

The ECB raised its key interest rate by 0.25% for the first time since July 2008. ECB president Jean Claude Trichet said the bank hadn’t decided if this was the first of a series of rate increases, but many commentators expect further increases, possibly in July and September.

The Professional Insurance Brokers Association (PIBA) said there is “little doubt” that the ECB rate rise of 0.25% is the beginning of an upward cycle.

Director of PIBA mortgage services Rachel Doyle said: “Fixed rates for those wishing to change now are already on the way up with some lenders even having suspended fixed rates.”

Chambers Ireland said that while the interest rate increase is a “bad blow” for businesses and consumers, the Government can immediately soften the impact, by reducing costs and improving competitiveness.

The Bank of England decided to keep rates on hold at 0.5% despite British inflation jumping to 4.4% in February. It is seen as a sign Britain’s economy is not strong enough to withstand higher borrowing costs.