Homeowners hit by loan rate hike
Hard-pressed homeowners could face deepening money worries from higher mortgage repayments after European bank chiefs hiked interest rates.
The increase will push tens of thousands of already struggling households to the brink of debt, amid fears of at least two further rate rises this year, according to Labour..
And with warnings the rise could stymie recovery, Tanaiste Eamon Gilmore claimed the Government was making efforts to help troubled households.
"We are acutely aware of the difficulties many families, many households have in meeting their mortgage repayments," Mr Gilmore said. "We are very much mindful of the fact that something like 44,000 households are in mortgage arrears and an increase in mortgage rates will put an additional burden on households and families."
The interest-rate hike adds another 35-45 euro a month to homeowners paying an average 25-year mortgage.
And compounding the financial pain mortgage rates look set to be increased on at least two more occasions this year - by the end of the year average repayments could be up by well over 100 euro a month.
The European Central Bank blamed inflation for forcing the interest rate increase by 0.25% to 1.25% - the first hike since July 2008. Bank of Ireland announced it was raising its fixed-rate accounts by up to 1.3%, sparking fears other lenders will follow suit.
Mr Gilmore said the Government was looking at ways to help financially troubled households, including mortgage interest relief, placing a moratorium on repossessions, fast-tracking personal bankruptcy reform and cutting the cost of finance houses providing mortgages to absorb the impact.
But Sinn Fein's finance spokesman Pearse Doherty said the rate increase was devastating for struggling families.
"In the grips of a grave financial crisis that has hit each and every person in the State, which has resulted in reduced spending power and an increased debt burden, today's announcement comes as a devastating blow," Mr Doherty said. "Families who are already overburdened trying to cope with mortgage payments and other bills will be worse affected by this decision."