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Interest Rates

  • 19-11-2010 11:05am
    #1
    SonOfAdam
    Registered Users, Registered Users 2 Posts: 172 ✭✭


    Banks can now borrow from the ECB at around 1.5%, if a 'bailout' is on the cards that will shoot up to 5% (ish). My question is; will mortgage interest rates also jump to this overnight ?


Comments

  • #2
    Uriel.
    Registered Users, Registered Users 2 Posts: 8,062 ✭✭✭Uriel.


    It Depends.

    Obviously Fixed rates won't increase.

    Tracker Mortgages are Linked to the ECB rate

    Variable mortgage rates will go up.

    All mortgage rates (tracker and variable) will steadily climb in the next while but I can't see a huge increase in rates overnight. I would expect people to be cushioned somewhat over the next 6 months to get used to the significant change in their personal finances following the fiscal adjustments. I imagine the EU/IMF, Government, ECB/CB holding off on particularly large hikes until people adjust their personal budgets etc...


  • #3
    silverharp
    Registered Users, Registered Users 2 Posts: 18,854 ✭✭✭✭silverharp


    banks are making losses on their tracker mortgages as they are paying higher rates to access capital, so yes over the medium term interest rates will rise. Remember in 05 and 06 real ineterst rates were negetive, now real interest rates will be higher then the nominal rate for the next few years at least. The ECB managed rate only deals with short term money , they have little control over what happens for 10 to 30 year money

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