Mortgages, comparison between Euribor and Eurirs: what you need to know if you want to buy a house
Il real estate market recorded a marked acceleration, in the first quarter alone demand grew by 1.9% compared to the same period of 2023, and even, calculating only the month of March there was a surge of 6.9%, after a 25% drop in contracts in the previous year. Crif data – reports Il Sole 24 Ore – also highlight that subrogations have also started again (+11% in January on an annual basis). If we focus on the quadro macro this positive market inversion has reason to exist. Because the interest rate front is now less uncertain for aspiring borrowers. After that European Central Bankfrom July 2022 to September 2023, raised the cost of money by 450 basis points (bringing the Euribor from -0.5% to 4%) the chances that the cost of money will continue to rise have now almost disappeared. At this point, rates could either remain at these levels for a while or, better yet, they could go down. Consequently the uncertainty of embarking on a mortgage today and having to endure further increases by the ECB in the future it seems to have disappeared.
A less gloomy scenario – continues Il Sole – is therefore pushing many would-be borrowers to come forward again. And this explains the awakening of demand. To this we must add the growing segment of “green mortgages” (see article below). It should be noted that the demand, both for purchases and for subrogations, he has no doubts about the choice of rate. In the 90% or more of the cases we are on landline. From the analysis of the rate curve and the comparison between Euribor ed Eurirs. The 3-month Euribor (the most popular among banks for linking the calculation of the variable instalment) is at 3.82%, just below the ECB deposit rate (4%) and very close to the probable rate cut of 25 basis points scheduled for June. The 12 month Euribor (which by definition is called upon to see a little further) is at 3.6 percent. This is because the market is not pricing in a very aggressive ECB. Because of this the landline is convenient even more so than the variable on a probabilistic level, there is no certainty.