ECB projected to raise deposit rate to 2.5 per cent amid inflation pressures
Thursday 10 September 2026
The European Central Bank is expected to introduce a quarter-point rate increase, raising borrowing costs for Irish house buyers and tracker mortgage holders.
The European Central Bank is projected to increase its benchmark interest rate to 2.5 per cent in response to rising energy inflation.
The anticipated quarter-point hike to the deposit rate follows a previous increase in June, which raised the rate from 2 per cent to 2.25 per cent as energy costs rose due to geopolitical tensions in Iran.
Impact on Irish Borrowers
While the central bank aims to curb inflation without stopping economic growth, the decision will raise borrowing costs. This change will affect mortgage rates for individuals looking to secure a new loan or refinance their existing mortgage.
Martina Hennessy, chief executive of mortgage broker Doddl, stated that more than 100,000 tracker mortgage holders in Ireland are the most exposed to the rate adjustment.
According to analysis by Hennessy, a borrower with a remaining balance of €150,000 on a tracker mortgage over a 10 to 15-year term will see their repayments increase by approximately €216 per year from this single hike. Since this would mark the second rate increase this year, the total impact for these borrowers will rise to more than €430 extra per year.
Variable rate mortgage customers may also face impacts following the central bank's interest rate adjustment.