Double whammy of mortgage and energy bill hikes to cost households extra €3,000

Double whammy of mortgage and energy bill hikes to cost households extra €3,000

Posted on 14Sep

Households will suffer a double whammy next month, with higher mortgage rates and the latest wave of electricity and gas prices kicking in at the same time.

All the main energy companies are pushing up their prices from October.

These double-digit hikes are set to hit hard.

The combination of higher energy costs and increased mortgage rates mean some households are facing an extra €3,000 in payments.

And higher electricity prices, combined with gas or home-heating oil rises, means typical households will be shelling out an extra €2,000 a year.

Higher tracker mortgage rates will be implemented from the same month following the decision of the European Central Bank ( ECB) to hike its key lending rate by 0.75 percentage points to 1.25pc.

The bumper rate raise means tracker mortgage holders will be facing an additional €34 in higher payments for every €100,000 they owe, according to calculations by broker Joey Sheahan of

This is based on a tracker margin of 1pc over the ECB rate, with 15 years remaining. Over a year the extra cost amounts to €408.

Last month’s rise means the two rate rises will add an extra €800 a year for every €100,000 yet to be repaid.

This means that a family on a €200,000 mortgage will lead to repayments rising by more than €1,600 over a year.

The three main banks spared variable-rate customers from the ECB rise in July, but that is not expected to happen this time.

Variable-rate customers on a €200,000, 25-year mortgage, will face an additional €78 in monthly repayments if the full ECB rise is passed on. Over a year, this amounts to an extra €930 in mortgage costs.

Announcing the latest rate rise, ECB president Christine Lagarde failed to rule out another 0.75pc rise at the next meeting in October. She said the decision will be depend on the inflation rate.

Economist with Goodbody Stockbrokers, Dermot O’Leary, said the market is effectively now pricing in a refinancing rate at 2.75pc next year.

Daragh Cassidy of said: “The rate increase comes at a time of soaring energy bills, so is a real double whammy for households.”

He said consumers would question the wisdom of increasing rates when households are already dealing with soaring energy costs.

Gas and electricity bills have soared by over €2,000 a year over the past 18 months. “That’s the equivalent of an interest rate hike of 2pc already,” he said.

Price rises of between 20pc and 40pc come into effect on October 1 at Electric Ireland and SSE Airtricity. Bord Gáis Energy prices go up from October 2, with Energia prices rising from October 7.

Meanwhile, mortgage brokers have called on lenders to give home-buyers and switchers plenty of notice before higher fixed rates take effect.

This is because it is taking up to 12 weeks to effect a mortgage switch.

The rate people get is not the one they are approved for but the one at the point of mortgage drawdown.

Broker Michael Dowling said this meant people were missing out of lower mortgage rates as they have often gone up by the time they draw down their mortgages.

Martina Hennessy, of broker, said banks need to take their own service levels into account when announcing rate rises as many of them are consistently outside the Central Bank response time for switcher applications.


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