The cost of mortgages rises: what awaits us in the future (and what to do)

In July, inflation stood at 7.9% annually, just below the 8% registered in June. The general increase in prices does not necessarily save the cost of mortgages, also pushed up by the monetary policy of the European Central Bank (ECB), which on July 21 increased the main rates by 0.5%. The effects on mortgages are already measurable and it is difficult to make reliable forecasts for the near future.

A look at the cost of mortgages

We are in the wake of a waterfall effect. The expectation of inflation and inflation itself have an impact on the Eurirs index that determines the rate of fixed mortgages. The increase in the cost of money implemented by the ECB to curb inflation determines a growth of the Euribor, whose calculation enters into the formula for calculating the rates of variable mortgages.

The effects were felt several weeks in advance as, during the month of June, loans disbursed for the purchase of real estate amounted to 2.37% compared to 2.27% in May 2022 (both rates include the Taeg , that is, the ancillary costs of credit). Variable rates could exceed 2%, but currently several credit institutions offer rates close to 1%. The data collected in the Banks and Money report, published on August 9 by the Bank of Italy, however, indicate increases in different requests for other types of credit.

The cost of the credits

The capital loaned to citizens and not intended for the purchase of real estate cost 8.34% in June, compared to 8.25% registered in May.

Loans to non-financial companies cost 1.44% in June compared to 1.19% in the previous month. These are average values, like the average data for the remuneration of deposits, which remains at 0.31% without increases compared to the rate for the month of May. Some lenders give New customers interest rates close to 1.75%.

The future of fees

The Euribor, or the index that determines the cost of variable-rate mortgages, is the one that is most influenced by the ECB’s policies. The difference between the rates of fixed mortgages and the rates of variables will be increasingly subtle, although it is not very serious to make more detailed forecasts. For the next three months, floating rates are likely to exceed 2%, while fixed rates are expected to remain stable. The conditional is mandatory, because it becomes an increasingly requested model that in 2022 reached growth of 30%, thus becoming a tool that is increasingly requested by citizens.

The bond market also follows the influence of the rates imposed by the ECB. Yields are generally already rising and will more than likely continue to do so.

It is useless to launch into more predictions, the economy is a social science and needs time to clearly read both the direction it is taking and the reaction of the actors that animate it. The data relating to very short periods of time do not represent specific indications, but only guidelines.


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