So, it has started.
AIB has become the first of the big mortgage lenders to increase its fixed-rate mortgage rates.
It made its announcement at lunchtime today, around about the time the now former UK Chancellor, Kwasi Kwarteng, acknowledged his sacking.
The now notorious 'mini-Budget' which he, alongside his Prime Minister Liz Truss, launched just three weeks ago, crashed sterling and doubled UK bond rates.
It caused panic for mortgage lenders who withdrew offers and pushed up rates.
The two events are, of course, unrelated.
But the movement towards higher borrowing rates here and in other markets like the UK is unstoppable.
The UK’s route has been spectacular and dramatic, involving many twists and turns.
It’s taken on the grim plot of a Jacobean tragedy.
The move towards higher rates here has been slower with fewer fireworks.
It’s more like the streaming service drama that becomes more predictable with every instalment.
In case you haven’t noticed, inflation for lots of reasons has escalated to the point that central banks from the US Federal Reserve to the Bank of England to the European Central Bank (ECB) have all switched to full hawk mode.
They are all now committed to increasing interest rates to throttle inflation which is currently running at 10%.
The ECB has already increased its rates by 0.5% in July and 0.75% in September.
But ongoing inflationary pressure has led to increased speculation that it will increase interest rates by another 0.75% at its next Governing Council meeting in two weeks’ time.
This would see its deposit rate double.
There would also be an immediate effect on those holding tracker mortgages.
Broader mortgage lending rates are indirectly influenced by the rates set by the ECB.
They are also influenced by the longer-term rates in the bond markets.
These rates are set by the market.
At the start of this year, the yield on ten-year Irish government bonds was 0.25%.
The current yield is around 2.8%.
That’s a big jump but broadly tracks movements across other euro area countries.
The shift is explained mostly by inflation.
When there’s more inflation, an investor will want a greater return for their money.
And, it increases the possibility of higher interest rates for deposits which offer a safer alternative to investing in bonds.
This is another reason the yield demanded by bond investors goes up.
Add more risk, whether that’s the size of your national debt or the economic policies your government is intending to pursue, and the yield is likely to increase further.
The yield on UK ten-year bonds is currently just over 4%.
The UK had an added complication involving the investment position of its pension funds which added to its recent market turmoil.
The latest retail interest rates, published just this week by the Central Bank, showed how little new fixed mortgage rates had changed in the Irish market up to the end of August, despite one half a percentage point increase in rates from the ECB and the likelihood of further increases.
In fact, they were lower by thirteen basis points – or 0.13% - than they were in August 2021.
It even led the Irish banking system to slip from its usual position as the most or second-most expensive country in which to get a mortgage in the euro area (we’ve been vying with Greece for this dubious honour for the past decade) to being just the eighth most expensive.
Alas, with AIB’s decision (to be soon followed by others, no doubt) we’ve now clearly entered the era of higher rates.
Central Bankers call it the 'normalisation of monetary policy’.
At least we’ve been spared the drama.