ECB raises rates by 0.5% (July 2022)

How long before this rate is passed on to borrowers? I’m waiting to draw down. Not hopefully that we will escape a rise in rates.
 
It'll impact all Tracker Rate Mortgage Holders, immediately.

Standard Variable Rate loans will also likely see their rates increase, albeit the amount of the rate increase is at the descretion of the lender.

No impact to fixed rates.
 
ECB rate increases or decreases when announced on the Thursday are not effective within the ECB until the following Wednesday.
 
Banks are then required to increase or decrease the rates on the mortgages within the timelines as setout within the mortgages contracts, some types require changes from anywhere between 7 and 30 days after being effective.
 
On the news at lunchtime they were saying that it would cost someone on a tracker with a €250k mortgage over 25 years an extra €47/month but that it would cost someone on a variable rate over €60/mon (same amount & term). How is this the case? (note; figures may not be entirely correct)
 
When the ECB was in negative rates our mortgage co said that that here is a minimum amount they can charge would be ecb and .95%. If the ecb rate was negative the amount we would pay is .95%. The ecb rate at that time was negative.(-0.5%)
Today it has increased by 0.5% would that mean the rate changes stay the same as it was negative before or increase to 1.45%.
 
Peanuts said:
cost someone on a tracker with a €250k mortgage over 25 years an extra €47/month but that it would cost someone on a variable rate over €60/mon (same amount & term).
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Repayments on 250,000 over 25 years at 1%: €942
Repayments on 250,000 over 25 years at 1.5%: €999
Difference: €57

Repayments on 250,000 over 25 years at 3%: €1185
Repayments on 250,000 over 25 years at 3.5%: €1251
Difference: €66

So why is it different?

It is to do with the way mortgage repayments are calculated so that the actual repayment remains the same over the term of the loan.

When the interest rate is higher e.g. 3% you need to pay off more capital each month to keep the repayments the same.

But the additional interest is the same: .5% of €250k = €1,250 or €100 per month (in the first year.)

That is why I prefer to talk about the interest cost, rather than the actual repayments.

Brendan
 
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rameire said:
The ECB for lending has been at 0.00% since 2016.
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rameire said:
Dont believe the ECB for lending has ever been in negative.
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I just checked my mortgage details and it says ECBR plus .95% so I did get it wrong. Thank you for clarifying.
Looks like the mortgage will go from ECBRplus 0.95%=.95% to 1.45% so €742 to €762 using a calculator online.
 
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BOI and PTSB have said they will not raise standard variable or fixed rates in response to the ECB policy decision. However, tracker customers will be affected. BOI will raise tracker rates on August 10th. Timing is unclear for other lenders.

Ulster Bank have updated their website, but only to say that they will be raising tracker rates.
 
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SnowdaisyBell said:
If you have a tracker and fix now due to rate increases, does that mean you lose the tracker forever?
Click to expand...

Depends on the mortgage contract, but most contracts and instructions to fix, would result in your losing your tracker.

Key Post - Should borrowers with trackers consider fixing? (General guidelines)

It seems increasingly likely that we are going to see a series of rate hikes by the ECB in the near future. According to Philip Lane, ECB chief economist - "I think it’s clear that at some point we’re going to be moving rates, not just once, but over time, in a sequence." If the ECB raise the...
www.askaboutmoney.com
 
Brendan Burgess said:
Depends on the mortgage contract, but most contracts and instructions to fix, would result in your losing your tracker.

Key Post - Should borrowers with trackers consider fixing? (General guidelines)

It seems increasingly likely that we are going to see a series of rate hikes by the ECB in the near future. According to Philip Lane, ECB chief economist - "I think it’s clear that at some point we’re going to be moving rates, not just once, but over time, in a sequence." If the ECB raise the...
www.askaboutmoney.com
Click to expand...
Thanks!
 
Peanuts said:
On the news at lunchtime they were saying that it would cost someone on a tracker with a €250k mortgage over 25 years an extra €47/month but that it would cost someone on a variable rate over €60/mon (same amount & term). How is this the case? (note; figures may not be entirely correct)
Click to expand...

It seems as if the CCPC is the source

1658434843909.png
 
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