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The Kilkenny Observer Friday 29 July 2022
kilkennyobserver.ie
Opinion
Your Money & You John Ellis
How lenders will react to interest hike Interest rates are on the rise. The European Central Bank (ECB) has raised interest rates for the first time in over a decade. The ECB rate is the rate of interest that commercial banks are charged for loans from the European Central Bank. This rate then influences the interest rates that banks charge borrowers. The ECB have been under serious pressure due to the pandemic, food prices, the war in Ukraine with all that the conflict entails not to mention sky-high energy prices leading to price increases of up to 8% which is way above the ECB target rate of 2% The ECB interest rate has gone up by 0.50% which has taken many experts by surprise. The increase was expected to be 0.25% and increasing by such increments into 2023. The moneymen understand why the rates had to increase but there are
concerns that the current increase and proposed further increases could lead to a recession. Brokers Ireland said the rate increase “marks the beginning of a new era and predicting where the rate will end up with any degree of accuracy in like fortune telling” According to Joey Sheahan, Head of Credit at online broker MyMortgages.ie, all eyes will now be on the other lenders to see how they react to the ECB’s announcement. Whatever the size, a rate increase will have a knockon impact for hundreds of thousands of mortgage holders over the short-tomedium term. The rate increase will hit approx. 300,000 mortgage holders on tracker rates. Those on variable rates approx. 200,000 will have to wait and see what the banks will do with the rate increase. Bank of Ireland are first out of the blocks an-
nouncing they will be passing on the increase in full to its tracker mortgage customers from August. The following are examples of what it may cost the average household in the coming months. Tracker Rate: based on a €250,000 mortgage with 25 years remaining on a 1% tracker rate increasing to1.5% after the ECB’s announcement will cost an extra €47 monthly or €564 annually or €14,100 over the life of mortgage. Variable Rate: based on a 0.5% increase in interest rates from 3.2% to 3.7% on a €250,000 loan amount over 25 years would increase monthly repayment from €1,211 to 1,278 which is an additional €67 monthly or €804 annually or €20,051 additional interest over 25 years. Total interest repaid would increase from €113,509 to €133,560. Should
the loan be higher, or the remaining term be longer, this will increase the costs. For example, if the loan was over 30 years it would add an additional €5,000 to the total repayments. Switching activity has been busy this year with a further flurry of activity expected over the coming months as more people move to try to lock in fixed rates and get an element of protection from further increase rate rises. In a recent survey earlier this year by leading protection provider Royal London one the most striking findings was that more than half of respondents said they have no plans to switch their mortgage providers in search of better value! Even though it’s estimated that up to 60% of eligible’ mortgages for principal dwelling homes stood to save over €1,000 within the first year if they switched, and more than €10,000 over
Bigger and better every year
After an absence of two years the great Iverk Show is delighted to be back. It is all happening in Piltown on Saturday 27th August. “We are already looking forward to the best show
ever,” said chairman Robert Dowley. With over €100,000 in prizes for the first time, there is something for everyone. From tiny tots to international show jumping superstars to dogs, poultry, crafts and vintage
machinery, fashion, all-day entertainment and much, much more. And this is not the first time the Iverk Show has bounced back after a break. In 1892 and 1951 after a break of ten years
in both cases the revival shows came back stronger than ever. We are really looking forward to the new competitions and events. What caught my eye was the new ‘Best Dressed Lady and Gentlemen’. Kindly
their remaining term. One of the barriers cited was people didn’t think it will be easy or worth the hassle. Methinks this will now change. According to MyMorgage. ie, based on a loan to value of
“Somewhat of a no-brainer for many...
”
Sponsored by The Merrion Hotel, Dublin and Connolly’s Red Mills Store there are fabulous prizes to be won. Now lads, here is your chance to make a name for yourself! Pride of place in the cattle section must go to the continued partnership with sponsor Aldi in association with ABP Food Group and the Irish Angus Cattle Society for the Irish Angus All Ireland Bull Calf Championships. The show horse and pony classes continue to offer opportunities for all equestrian enthusiasts. Frank Knight and Morris Oil have joint sponsorship of the All-Ireland Broodmare and Foal Team final. The side saddle riding classes are always beautiful to watch and so graceful There are 25 dog classes and all dogs are welcome. Just bring your dog and enter on the day! The 41 classes in the fantastic poultry marque are a must to visit. There are Hard Feather, Light and Heavy Soft Feathered, Bantams and Waterfowl breeds on display. The flower arrangers create their own magic with very interesting themes this year. The children’s class “All Creatures Great and Small” is a tribute to the imagination of our young people. Classes for young people
under 60%, a borrower can currently fix at a rate of 2.5% for 25 years. This is somewhat of a “no brainer” for many people as they need never worry about a rate increases for the full duration of their mortgage and they argue “that every borrower should be considering long term fixed rates now, even if they are currently on a fixed rate, as there is often no breakage fee depending on lender and even if there is, the savings you can make generally outweighs the cost of any breakage fee payable”. I was speaking with one client who has just completed her switch and has locked in a guaranteed saving of €202 per month for the next three years – a guaranteed saving of over €7,000. It’s time to move in every sense of the word. john@ellisfinancial.ie 086 8362633.
have always been a feature of Iverk Show. In the 1800s the local primary schools had a school garden to encourage pupils to grow vegetables. The best plot won a prize for the child and the teacher supervisor. Check out the baking, arts and crafts, and photography classes. The ‘great’ cherry cake competition is very well named with over 50 entries. The Iverk catwalk will be heaving with the fashion show once again. If you are a bonny baby under 18 months, make sure your parents bring you as every baby will get a prize! Why not check it all out on our website www.iverkshow. ie. You can also follow us on Facebook, Twitter and Instagram. Free parking with a designated area for disabled parking.
