ECB Set to Hike Interest Rates Amid Iran War-Driven Inflation Fears

The European Central Bank (ECB) is expected to increase interest rates on Thursday in an effort to combat inflation caused by the Iran war. Analysts predict a quarter-point hike to the ECB's deposit rate, bringing it from 2.25% to 2.5%. This decision aims to prevent the surge in energy prices from snowballing into widespread inflation.

Martina Hennessy, CEO of broker Doddl, warns that Ireland's over 100,000 tracker mortgage holders will be most affected by an increase in interest rates. For someone with €150,000 left on their tracker mortgage over 10-15 years, repayments could jump by around €216 per year, according to Hennessy.

Variable rate customers may also face higher borrowing costs if the ECB increases interest rates. However, consumers might benefit from an increase in savings and deposit rates. Hennessy notes that a significant spread exists between the highest and lowest mortgage rates available, with potential savings of up to €640 per month or €7,600 per annum for households negotiating new loans or refinancing existing ones.