ECB Rate Rise to 1.5% Expected

After a few strong hints  and comments from Claude Trichet – it is widely expected that the ECB  will  raise the eurozone base rate to 1.5 % on Thursday July 7th .
This will be an increase of .25% . All tracker mortgages will be increased – and variable rate mortgages are expected to follow.

ECB president Trichet signaled that the ECB is prepared to raise interest rates whens peaking before the European Parliament last week he  said that ECB policy remains accommodative and we are in a state of “strong vigilance”. Trichet’s reference to” strong vigilance” usually means  the ECB is prepared to hike rates to combat inflationary pressures in the EU.

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This table shows Historic ECB Rates going back to 2003.
It shows the ECB rate at 4.25% in July 2008 .  Many buyers in the boom would have got tracker rates with an ECB rate of 3.25 or maybe 3%. So – whilst the value of their houses may have fallen – most buyers  who got tracker maortgages  in 2005/2006 will be still paying a lot less on their mortgage now than when they started.