Up to 475,000 homeowners face an extra €100 a month on mortgage repayments 

President of the European Central Bank chief Christine Lagarde has warned of further hikes in interest rates for mortgage holders, continuing into 2023. Picture: Thomas Lohnes/Getty Images

Up to 475,000 homeowners are braced for rate hikes that will add €100 a month to repayments on a €300,000 mortgage. 

Customers on tracker mortgages will be hit almost immediately by the European Central Bank’s (ECB) record 0.75% interest rate hike while the main Irish banks are now "reviewing" their options before deciding if the ECB rate hikes will be passed on to variable rate customers. 

If the rate increases are passed on, 175,000 variable rate customers, as well as 300,000 tracker customers, will face paying around €33 more per month for every €100,000 borrowed. 

The ECB’s decision to increase rates by 0.75% follows a 0.5% move in late July, meaning the combined increases raise the monthly payments on every €100,000 borrowed under a tracker loan, with 15 years still to run, by €56.63 — or €169.89 per month on a €300,000 mortgage.

AIB said it will be writing to its tracker mortgage customers to confirm their new rate while Bank of Ireland said the new rate for tracker mortgage customers will take effect on September 28 for most customers.

It comes against a background of wider cost-of-living pressures, with an emergency summit of EU energy ministers to take place in Brussels today to examine proposals to tackle soaring electricity and gas prices.

ECB chief Christine Lagarde has warned of further hikes in interest rates for mortgage holders, continuing into 2023:

We expect to raise interest rates further because inflation remains far too high and is likely to stay above our target for an extended period.

Minister for Public Expenditure, Michael McGrath, said the interest rate move would be factored into the government’s budget decisions.

“We acknowledge that we cannot fully offset the cost of this energy inflation for everyone,”  Mr McGrath said.

“For people who are on low income, fixed income, they will need particular help and assistance. 

"But there are many others too who are earning above the eligibility threshold for any State benefits that we are going to have to support and give assistance to.” 

The Minister for Justice Helen McEntee said people will face further financial pain as the cost-of-living crisis shows no signs of slowing.

She would “not speculate” on reports the government was providing €3bn in supports to soften the blow of high costs in energy, food, and fuel.

“We are trying to buffer some of the increases that people are feeling, be it in energy, be it in food or fuel, right across the board, and we are trying to ensure that work pays as well so that people can benefit from any pay increases that are happening in the next few months,”  Ms McEntee said.

"So that will be our focus, that will be our intention, and obviously any exact figures in that we will be making it clear in the next two weeks.”