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As expected, the European central bank has decided to keep interest rates unchanged. The main reference rate remains at 0.00%, that of marginal loans at 0.25% and that of deposits at -0.50%.
The ECB has planned for 2020 a Eurozone GDP fall between 5 and the 12%. President Christine Lagarde He said the European Union is dealing with an unprecedented crisis in peacetime.
ECB meeting: what are the consequences of mortgage rates?
Taking into account the scenario of strong contraction foreseen by the ECB board, today it is not easy to say what is the future of the credit market And if the banks will lend mortgages easily and under favorable conditions in the coming months.
Partial blocking of real estate selling and the slowdown in normal banking operations in the past two months will inevitably lead to one contraction in mortgage payments for the current year, but at the moment there are no signs of credit crisis by the banks
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On the contrary, the interbank rates that regulate the mortgage cost are at the minimum levels and also the lender offers They are still very convenient.
The Impact on Variable Rate Mortgages
Since the beginning of the year, the Euribor, the benchmark index for variable rate mortgages, has started to rise again. In particular, quarterly and semi-annual maturities increased by 12 and 15 basis points, respectively.
In terms of installments, on a mortgage of 100,000 euros in 20 years old, means an increase of approx. 5 euros per month.
In any case, the mortgages offered by the banks are still very advantageous, both in the case of the purchase of a property, as well as if the option of subrogation of the mortgage was evaluated. Thanks to interbank indices, such as Euribor itself, and the corresponding parameter for fixed-rate mortgages, Eurirs.
Holders of a variable rate mortgagedespite the upward trend ofeuribor, you can be sure that the index is still well below the main reference rate ECB, stopped at zero. Today the monthly Euribor term is equal to -0.47, while the quarterly is a -0.26 and the semester a -0.17.
The Impact on Variable Rate Mortgages
Who is preparing to release a new one? fixed rate mortgage or a substitute for the old mortgage, today you can take advantage of incredibly advantageous rates. Since the beginning of the year, all IRS deadlines have dropped half a percentage point.
Anyone who wants to get a mortgage with a constant long-term installment, for example 30 years, with Eurirs of the same duration of 0.02, could get an interest rate of 0.65%.
For a mortgage of 120,000 euros, the monthly payment would be 366.98 euros, while the total amount to be paid would be 132,112.80 euros. About 12,000 euros more than received, or about 400 euros per year in interest expenses will be returned. Less than the average cost of a monthly rental.
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