Cheaper mortgages and lower installments. The decline in interest rates begins to have an impact on the residential mortgage market after the peak in the second half of 2023. The decline in interest rates affected banks’ offers; both purchase and subrogation mortgages experienced a decline of 50 to 80 basis points. First of all, mortgage demand from buyers under 36 is on the rise, representing 48% of buy-to-let mortgage requests in January; this is six points more than in December 2023. But a second increase relates to mortgage applications – subrogation: in one they went from 22% to 32% per month.
Subrogation of a mortgage offers the possibility of transferring the existing loan in one bank to another credit institution: a step that does not require expenses such as investigation of the case or notarial procedures. Subrogation requests mainly arise from offers from banks for properties with high energy efficiency. In detail, institutions such as Intesa Sanpaolo and Credit Agricole offer subrogation mortgages with rates of 2.5% for properties in energy classes A, B or C and 3% for homes classified D to G.
The savings offered by subrogation are greater the greater the remaining equity of the mortgage to be subrogated. As emphasized on comparison sites, assuming a 25-year mortgage of 140 thousand Euros with a fixed interest rate projected in January 2023, the new subrogation rate provides savings of 126 Euros per month in the case of energy classes A, B. For property or energy classes C, D and above, it is 103 Euros.
Regarding the broader trend of the real estate market, analysis of benchmark indices points to a slight increase in 20-year fixed-rate mortgages, reaching 2.6%. On the other hand, the variable interest housing loans index recorded a slight decrease, reaching an average level of 3.93%.
Cheaper mortgages and lower repayments: How long will it last?
The first positive signs of new fixed-rate mortgages have emerged in recent months, thanks to a decline in the IRS index (the interbank reference rate for fixed-rate mortgages); It is estimated that those who make this decision will save up to 24 thousand euros in three years. Buy a house now. Variable interest rates for those who had already bought a home remained frozen after months of sharp installment increases. Suffice it to say that, according to Codacons’ report, in January you paid 454 euros more for a loan of 200 thousand euros for 20 years than three years ago, and you incur extra charges of 5,500 euros per year.
But now the Euribor (the reference index for variable rate mortgages) is also slowly starting to fall: This means that in 2024 we may see a slow but steady change of direction in the currently envisaged variable rate mortgages; A significant amount will be deducted from the monthly interest. installments will be paid. It may drop to just 10 euros per month initially, then drop to 100 euros per month by the end of the year. Can we be sure? No, because if the experts’ predictions of a 1 percentage point interest rate cut by the end of the year are correct, it is also true that the crisis in the Red Sea may call everything into question. We explained it here.
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
