The current interest rate environment
As the ECB day approaches, scheduled for, expectations are growing for the decisions that the European Central Bank, led by Christine Lagarde, will take regarding interest rates. Experts predict a possible cut in the cost of money by a quarter of a point, which could have significant repercussions for those with an adjustable rate mortgage. This scenario is part of a changing economic environment, where inflation and the monetary policies of other central banks, such as the Federal Reserve and the Bank of England, play a
crucial role.
Impact on variable-rate mortgages
According to analyses by Mutuionline.it, the easing of the ECB’s monetary policy is making mortgages increasingly advantageous. Currently, the average TAN for 20- and 30-year variable-rate mortgages has fallen below 4%, to 3.93%. If the ECB were to proceed with the expected cut, the average TAN could fall further to 3.68%, leading to significant savings for borrowers. For a mortgage of 150,000 euros with a duration of 20 years, the monthly payment could decrease from 903 to 884 euros, with a total savings of about 4,700
euros on interest.
Future prospects and borrowers’ choices
Forecasts indicate that, if the ECB makes further cuts in the coming months, the average TAN of variable rate mortgages could fall by up to 3.18%. This scenario would make variable-rate mortgages very competitive compared to fixed-rate mortgages, which currently offer lower rates, such as 2.46% for the best deals. However, the situation is constantly evolving and borrowers will need to closely monitor the decisions of the ECB and other central banks. The possibility of an alignment of rates between the two types of mortgage could occur by the end of the year, making it necessary to carefully examine the offers available on the market
.
