Mortgages in the firing line as ECB increases interest rates by 0.25 percentage points

The European Central Bank (ECB) raised interest rates by a further quarter point (0.25 per cent) on Thursday as conflict in the Middle East stoked a fresh surge in energy prices.Policymakers also signalled they were ready to lift borrowing costs again if the inflation outlook does not improve.“The outlook remains highly uncertain, with risks to the upside for inflation and to the downside for economic growth,” they said in a statement.The widely anticipated move, which lifted the ECB’s main deposit rate to 2.5 per cent, will put further pressure on borrowers here.READ MOREIt also comes as separate figures from the Central Statistics Office indicate that mortgage interest repayments in Ireland have risen by 10 per cent in the last 12 months. A homeowner with a tracker rate on a €150,000 loan with more than 10 years left faces an annual increase of roughly €200 in their repayments as a result of Thursday’s decisionThe latest hike will potentially impact variable rates offered by Irish banks in the months ahead and people coming off fixed rates are also likely to have to pay more.[ Irish mortgage holders warned to brace for ‘tough winter’ with two rate hikes expectedOpens in new window ]While ECB president Christine Lagarde has repeatedly insisted the bank is not on a predetermined rate path, financial markets are pricing in one more rate hike this year, ​followed by one or two moves next year.Policymakers are battling an increase in consumer-price inflation which rose above 3 per cent last month, an increased that is unlikely to recede in the months ahead. “It’s going ​to be the outlook that will be watched closely, whether this will follow a wait-and-see stance or whether ‌there could be another hike,” said Susannah Streeter, ​chief investment strategist at Wealth Club in London.From kitchen counter to supermarket shelves, the rise of Ballymaloe Foods“The ECB will obviously hike this week,” said Jari Stehn, chief European economist at Goldman Sachs. “But huge uncertainty about the outlook and some signs of a split in the governing council mean it’s likely to leave the rate outlook completely open.”Lagarde is scheduled to hold a press conference later this afternoon.Oil prices eased on Thursday but Brent ⁠crude remained above $100 (€86) ​a barrel as traders braced for deeper supply disruptions after Iran and the US launched their largest wave of attacks on shipping since their six-month-old conflict began..