First Active has become the first financial institution to pass on last week's interest rate rise by the European Central Bank to its existing mortgage customers. From today, First Active's variable rate for residential mortgages will increase by 0.25 per cent to 5.88 per cent. All existing customers will be notified of their new repayments. On a £100,000 (€127,064) mortgage over 20 years, the repayments will rise to £709.52 from £695.25, a rise of £14.27.
The bank is also increasing its one-year discounted variable rate to 5.38 per cent from 4.99 per cent for new business from today. This amounts to a rise of 0.39 per cent, well in excess of the interest rate rise.
According to a statement from First Active, all other rates including deposit rates are under review.
Irish Nationwide is the only other financial institution to have increased its rates following on from the ECB rise on August 31st. It increased its variable rate for new business only from 5.64 to 5.70 per cent last Friday.
This is the ECB's sixth increase in interest rates in 10 months and the other Irish lenders are likely to follow First Active's lead in passing on the latest increase to their customers in the coming weeks.
Higher mortgage repayments across the board will feed through to the Consumer Price Index and add to inflationary pressures.
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)