Mortgage, the ECB effect: what changes for rates and who pays the highest price
TURIN. New increases coming for mortgages. The 50 basis point increase in the cost of money, with interest rates on refinancing operations going from 3% to 3.5%. A decision that cannot fail to weigh on loans to businesses and households, which are inevitably destined to undergo a new increase. There are 6.8 million indebted households in Italy, equal to approximately 25% of the total: of these, 3 and a half million have a mortgage to purchase a house.
The landline doesn’t change
The installments of the old fixed-rate mortgages obviously will not change and will remain unchanged until the end of the repayment plan. Different fate, however, will be up to those who have signed up for a variable rate loan. Since the beginning of the monetary tightening initiated by the ECB, according to Fabi, the installments of old variable-rate mortgages have grown by an average of 54%. In a nutshell, those who used to pay an installment of around 500 euros a month today pay out 770, or 270 euros more.
The new funding
Even worse will go to those who have to take out a new mortgage now. According to the main banking union, variable rates could soon reach an average of 4.9% from 0.6% at the end of 2021: this means that for a 150,000 euro loan with a duration of 20 years, the monthly payment it will be 995 euros, a good 329 euros more (+49.5%) than what would have been obtained a year ago, or 665 euros. No good news even on the front of new fixed-rate mortgages, which have gone from an average interest of around 1.8% to even over 4%, with monthly installments which, therefore, may result, on the basis of the offers of banks, even doubled.
The ECB raises interest rates by 50 basis points
And there is always talk of price increases for consumer credit: at the end of 2021 the average interest rate was 8.1%, in the light of tomorrow’s decision it could reach 11.9%. Doing the math: to buy a 25,000 euro car entirely in installments, with a 10-year loan, the total cost goes from 37,426 euros to 44,065 euros, with an overall difference of 6,639 euros (+17.7%) compared to the rates end of 2021; to buy a 750-euro washing machine entirely in installments, with a 5-year loan, the total cost goes from 942 euros to 1,037 euros, with an overall difference of 96 euros (+10.2%) compared to the rates at the end of 2021.