The European Central Bank has raised interest rates by 0.25%.

The move brings the rate at which the bank lends money to financial institutions up to 3.5%.

This comes less than 24 hours after Minister for Finance Brian Cowen announced the doubling of mortgage interest relief for first-time home buyers in the Budget.

The relief, which is paid monthly, will increase from €4,000 to €8,000 for a single person, rising to €16,000 for a married couple.

But the European Central Bank appears to be pulling in a different direction.

First-time house buyers in Ireland usually take out 35-year loans.

On that basis a €300,000 loan will cost an extra €46 a month, while a €400,000 loan will rise by €62.

Today's ECB interest rate rise does not wipe out the benefit of the Budget measures. But in the context of six interest rate rises in 12 months, borrowing money is now much more expensive than at this time last year.