Decrease in interest rates on mortgages: 1200 euros less per year


Emma Potter

Between October and the end of December 2023, the reduction in monthly mortgage payments of up to 60 euros has already started to have its positive effects on family budgets. The European Central Bank (ECB) has anticipated the first cut to interest rates since the start of the inflation crisis, signaling possible incremental savings of up to 100 euros per month.

This article analyzes the current situation of mortgage interest rates, future prospects and possible strategies for families and real estate investors.

Falling interest rates: an opportunity for the real estate market

According to the statistical bulletin of the Bank of Italy, in January 2024, interest rates on loans to families for the purchase of homes, including ancillary costs, were reduced to 4.38% compared to 4.82% in December 2023.

This decrease in interest rates represents positive news for all those who are considering purchasing a home or who already have a mortgage and are looking for more advantageous conditions. The reduction in rates means, in fact, the possibility of saving on monthly installments, a factor that could revitalize the real estate market, recently hit by a decline in sales.

It is also important to note the change in the composition of loans, with a decrease in the share of variable rate loans in favor of fixed rate ones, a sign of a greater search for stability by borrowers.

The subrogation strategy to optimize your mortgage

The recent reversal in mortgage interest rates offers a unique opportunity for holders of variable rate or fixed rate mortgages that are no longer competitive: the subrogation of the mortgage.

This option allows you to transfer your mortgage to another bank that offers more advantageous conditions, without additional costs for the operation. With interest rates currently falling, many citizens may find this solution convenient to reduce the amount of their monthly payments.

Subrogation is therefore configured as a strategic tool not only to lighten the burden of debt on the family budget but also to take advantage of more favorable market conditions, thus optimizing the financial management of one's mortgage.

What to expect from the next rate cuts

Financial sector analysts anticipate a path of monetary policy easing by the European Central Bank, with a first rate cut of 25 basis points already in April, followed by a further cut of the same amount in June.

This series of reductions, which could extend into the second half of 2024 with cuts of up to 0.5%, has already begun to positively influence the market, creating a favorable environment for those wishing to take out new mortgages or renegotiate existing ones.

The impact of these cuts on mortgage interest rates is significant, as it could lead to a substantial decrease in the cost of loans, further easing monthly payments for borrowers and encouraging access to credit for the purchase of properties.

The analysis carried out by highlights how, at the moment, the best fixed rate available for a standard mortgage of 126,000 euros with a duration of 25 years is 3.36%, corresponding to a monthly installment of 600.13 euros.

This represents a significant saving compared to the situation in October, when the rate was 4.1% with an installment of 662.99 euros, thus marking a monthly saving of approximately 62 euros. Considering the entire duration of the loan, the total savings can reach 18,600 euros.

Furthermore, the downward trend in average rates on the market promises further savings, not only in monthly terms but also on the entire amount of the loan.

With the next cuts expected by the ECB, experts estimate that monthly savings could increase, potentially exceeding 100 euros per month compared to October levels. The prospect of finding fixed rate mortgage offers of around 2.7% towards the end of the year opens up even more optimistic scenarios for future borrowers and for those looking for more advantageous financing conditions.