Mortgage rates start to fall: the market anticipates the ECB

The first to make the prediction was the president of ABI, Antonio Patuelli, who in an interview a few weeks ago with Corriere della Sera explained that «the market anticipates Frankfurt and the effects of a future easing of monetary policy are beginning to be seen. .” Thus, after rapid interest rate increases by the European Central Bank, which took the cost of money to 4.5%, raising mortgage prices, the market is now beginning to discount the possible cuts expected in mid- 2024. In short, banks that lend money take into account that raising funds will be less expensive within a few months and will pass on part of the potential savings to customers who are currently asking for a mortgage loan. The imperceptible sign is the drop of a tenth of a point that has affected in recent weeks the ten-year IRS and the three-month Euribor, the main benchmarks for the disbursement of fixed and variable rate mortgages, respectively. A minimal but significant contraction, after a year and a half of increases almost uninterrupted.

The market expectation is for a Euribor level of around 2.3-2.4% by the end of this year (one and a half points compared to today) and 2% next year. According to empirical research carried out on online portals, a mortgage of 200 thousand euros for 25 years currently has a price of around 3.7%. While the variable with the same criterion costs around 4.66%. The consideration to be made today is complex but for the most daring it would almost be advisable, if the stipulation were made today, to choose the variable (perhaps with a limit to avoid surprises). This is because if in the coming months, as expected, there is a reduction in official rates, savings could increase and it could even be imagined falling below a fixed rate agreed today. Not only.

It should not be forgotten that there is the possibility of subrogation. Therefore, choosing the variable may allow you to immediately take advantage of the lower benefit. And convert to fixed when it returns to the minimum levels recorded by 2021. The path is, however, set. And borrowers’ anguish should ease. It was Patuelli himself who outlined the new scenario in his statements in the same interview. There is “a different picture to that portrayed so far, centered on the anguish of rising rates and the difficulties of companies and families: mortgage payments could fall before the moves of European central banks”. Now all that remains is to turn our gaze and our prayers to the good will of the President of the ECB, Christine Lagarde.

Source: IL Tempo