Prospect of rising mortgage costs next challenge for families
The weekend call by the head of the Dutch Central Bank for a rise in interest rates could not have come at a worse time for mortgage holders.
For over a decade, monthly mortgage repayments have been at or near rock bottom for hundreds of thousands of mortgage holders across Ireland. Now, for the first time since the great financial crash, mortgage holders should be adjusting their household finances to accommodate a possible rate increase.
Incremental but significant
An increase of about 25 basis points (one quarter percent) is highly anticipated. This means that monthly repayments would increase by about €40 on a €300,000 mortgage.
Rising mortgage costs divert money that people might ordinarily have used to counter the impact of rising inflation across the economy. This includes fuel and food costs which have seen a steady rise in recent months and are already impacting families.
Rising costs also deplete actual savings some people may have built up during Covid and of significance, inflation in general erodes the real value of money in the long term. So, today’s price rises have a real and negative impact on household budgets today as well as in the future.
Concern about the future
In a recent survey carried out by MoneyWhizz, while a majority of people are confident they could withstand a financial shock presently, many are also concerned about their financial situation in the future. Additionally, one-in-six people in their thirties admitted that giving a wedding gift or birthday present would pose a financial challenge for them.
According to the Central Bank of Ireland, there are over 722,000 private dwelling house mortgages in Ireland with about 6.5% of those in arrears.