ECB confirms rise in interest rates

The European Central Bank has confirmed a quarter per cent rise in interest rates to 1.25%.

The rise is the first handed down since July 2008, and it is feared the move could pave the way for more increases in the future.

Enterprise Minister Richard Bruton has said the increased rate in not a good development.

This is going to make it harder for families, harder for consumers to spend and is not a trend that anyone would welcome,” Mr Bruton said.

“It doesn’t deflect us though from our (Government) core work which is to get a working banking system going again; a core bank that can lend to families and small business and that is what we have acted decisively to do.”

The rate hike adds around €390 a year onto the average €250,000 mortgage.

Michael Dowling of the Irish Mortgage Advisors Federation is predicting another two increases this year.

"This is not good news for anybody…everybody is being hit by increased costs whether its taxation; the costs of utilities," he said.

"Now we're seeing mortgage rates rise for everybody other than fixed-rate mortgage holders and these rises are going to continue as the year progresses.

"We are on an upward spiral in terms of interest rates."