Mortgage holders should expect an interest increase of up to 2% over the next six to nine months, according to economist Jim Power.The rates are expected to go up by at least 0.25% – but reports suggest they could rise by as much as 0.5%.The regulator is making the move in a bid to tackle runaway inflation, which currently sits at just over 8.5% in Europe and 9% in Ireland.“This won’t be the end of it because inflation is still becoming deeply embedded in the Euro area,” he said.
“I think the ECB will take a view that rates will have to at least rise from 0% at the moment to 2% over the next six to nine months to try and bring inflation back under control.The change will affect mortgage holders on standard variable or tracker rates.The interest rate hike will be the first in Europe since 2011.
It will come into force at lunchtime today and follows a cut to Eurozone economic growth projections for 2022 by the European Commission.“The European Central Bank will move quite aggressively on the rates front, taking rates from around 0% to 2% and at that stage take a breath to see if it is helping bring inflation back under control,” he said.The ECB has already signalled plans to increase rats once again in September, with markets expecting a further 0.5%.