The rise in the cost of money will weigh on household mortgage payments: the strongest effect will be on the variables, which will increase as early as March. In this phase, however, the market is showing unusual downward dynamics that allow for savings on fixed assets, so much so that in March, with the next ECB increase, a variable rate could be more expensive than fixed.
How do rates change?
Only variable rate mortgages are getting higher. Experts calculate an increase of 35-40 euros per month for a 25-year mortgage of 130 thousand euros, signed in January 2022. The increase reaches almost 200 euros adding up all the increases decided by the ECB since last summer.
What can be done if the installment has become unsustainable?
There are several ways. One is the traditional one of subrogation: the government has renewed the tool of renegotiating the rate, ie the transition from variable to fixed which is more stable. Banks cannot refuse the request, but only for borrowers with an Isee income not exceeding 35 thousand euros and with stipulation or acceptance before January 2023.
The editorial – Rates, ECB tightening but it won’t last
What happens to fixed rate mortgages?
The existing ones remain unchanged. However, the tightening is affecting the rates applied to new fixed mortgages which have become more expensive since last summer. For a few weeks, however, the main banks have been cutting the fixed rates of their offers, even by 55 basis points. «Ing reduced them by 10 points, Credit Agricole by 15, Intesa Sanpaolo by 15 points for the over 36s while for the under 36s it gave a 55 point cut» says Guido Bertolino of MutuiSupermarket.
Why are institutions moving downwards?
They are acknowledging the contraction at the end of January of the IRS, the index to which fixed mortgages are linked. “They are launching aggressive offers for young people,” explains Bertolino.
Why is the IRS going down?
Because it predicts a future reversal of course by the ECB and a new policy of cuts starting from the first quarter of 2024. The 10-year IRS is at 2.89%, at 30 years it is at 2.36%, i.e. 50 points lower while the 40-year IRS is 2.10%.
Could mortgages become cheaper again?
This is what emerges from the Euribor, the index that guides the variables. The three-month future sees further increases in ECB rates in the short term, but in the long term it assumes a decline starting from the beginning of 2024. —