Irish mortgage rates may rise due to trade tensions

Irish homeowners may face higher mortgage rates due to a potential trade war between the U.S. and Europe. The Economic and Social Research Institute (ESRI) warns that if U.S. President Donald Trump continues with tariffs, mortgage rates in Ireland could rise by up to 1.5%. The ESRI's Dr. Paul Egan explained that the European Central Bank (ECB) could raise interest rates between 1% to 1.5% in response to increased tariffs. These changes would impact mortgage repayments. However, it is up to Irish banks to decide if they will pass these changes onto consumers. Dr. Egan highlighted that any trade conflict could create inflation across the eurozone. He mentioned the ECB would have to balance controlling inflation while supporting economic growth. The uncertainty from a trade war may also affect consumers' financial decisions, slowing down economic activity. Thousands of homeowners in Ireland are expected to transition from fixed-rate mortgages in the coming years and could see significant repayment increases if higher rates are implemented. Dr. Egan noted that uncertainty can lead businesses and consumers to delay investments and hiring. Furthermore, rising interest rates may hinder mortgage seekers and could elevate construction costs, affecting housing supply. In recent reports, the ESRI estimates that a U.S.-EU trade war could cost Ireland over €18 billion and lead to job losses. The economy could shrink by 3.7% in a worst-case scenario over the next five to seven years.