What a quarter-point rate rise costs on a mortgage
A quarter of a percentage point is the smallest move a central bank usually makes, and it is not nothing. On a €300,000 mortgage over 30 years, moving from 4% to 4.25% takes the monthly payment from €1,432.25 to €1,475.82 - an extra €43.57 every month, for as long as the higher rate holds.
The arithmetic
| Rate | Monthly payment |
|---|---|
| 4.00% | €1,432.25 |
| 4.25% | €1,475.82 |
The gap is €43.57 a month. Multiply that by twelve and the borrower is paying about €523 more a year for the same loan, the same house, the same term - just a quarter-point of rate.
Scale it up
Central banks rarely stop at a quarter-point when they are trying to cool an economy or fight inflation. A full percentage point on the same loan - 4% to 5% - takes the monthly payment to €1,610.46, an increase of €178.21 a month. Over the full 30-year term, that one-point move costs €64,158 in total extra interest. The quarter-point is the unit; the full point shows what four of those units, stacked up, actually do to a household budget.
The pass-through caveat
Whether a rate move reaches a mortgage holder immediately depends entirely on the type of loan. Variable-rate and tracker mortgages pass through fast, often within a month or two of a central bank decision, because the lender’s rate is contractually tied to a reference rate or reviewable at short notice. Fixed-rate mortgages are insulated until the fixed period ends - a borrower on a five-year fix does not feel a quarter-point rise at all until renewal, at which point they refinance into whatever rates exist then, not the rate that triggered the original headline. This is why a single central bank decision can dominate the news while changing nothing for most fixed-rate borrowers that month, and everything for them a few years later.
Try your own numbers
The exact effect on a real mortgage depends on the loan size, the term remaining, and the rate change involved. The mortgage calculator’s rate field is built for precisely this experiment: enter the current rate, note the payment, then change only the rate field by 0.25% or 1% and see the new payment. Because the loan amount and term stay fixed, the change in the monthly figure is the pass-through cost of the rate move alone.