MORTGAGE rates will increase next week after the Central Bank raised wholesale interest rates by half a percentage point yesterday.
A range of fixed rate and discounted mortgages are likely to be taken off the market today while the banks and building societies decide by how much they will raise rates.
Mr Mick Osborne, treasurer at First National Building Society, said the society would examine its discount and fixed rates today and that they would probably be suspended.
Other banks and societies said they would take stock with a view to raising rates next week.
The most likely rise will be a half percentage point on most mortgages, although some society executives said larger rises could not be ruled out.
A half point rise on a £40,000 mortgage over 20 years would add about £12 to the monthly repayment. On a £60,000 mortgage it would add about £18.
Mr Martin Walsh, head of lending at EBS, said the society would not react quickly. "The markets have to assess what the realities are," he said. "Certainly, the EBS would not be intending to lead any round of rate rises."
A spokesman for Irish Permanent thought a rise appeared inevitable.
The Central Bank pushed up rates in response to figures showing a sharp rise in borrowing in March, hoping that it would calm the housing market.
The other key factor was the recent fall of the pound and the resulting rise in rates on the wholesale money market. The pound closed lower again yesterday, ending at under 92p sterling.
Competitive pressures in the lending industry are so intense that few lenders will want to be seen to move first.
While borrowers will soon see repayments rise, it should not be the beginning of an upward trend. If, as expected, Ireland is beading into monetary union, rates will have to fall again later in the year to bring them into line with German levels.