The European Central Bank has decided to reduce the interest rates of a quarter point, bringing them to 2.5%. This move will have consequences both on mortgages and on financial markets, but global economic uncertainty could influence the future decisions of the ECB.
The trend of the world economy and the new policies of Germany will be key factors in determining if there are further cuts in the coming months.
But what does this reduction mean for those who have a mortgage or do you want to turn on one? And how will the markets react to this choice?
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The ECB cuts the rates: a decision influenced by the global economy
The 2.5% cut of rates by the ECB was motivated by the need to support economic growth in a context of global uncertainty. However, the hypothesis of further reductions it is no longer so obvious As it was thought until a few months ago.
One of the main factors of this uncertainty is the economic policy of the United States, influenced by the choices of Donald Trump. The recent reverse on duties has made it difficult for investors to predict the trend of the global economy, creating instability in the financial markets.
In Europe, however, a key element is represented by Germany, which with the new chancellor in pectore Friedrich Merz has announced an unprecedented economic stimulus plan. The injection of approximately 1,500-1,700 billion euros in the next ten years could reduce the need for further interventions of the ECB to support the economy.
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Variable rate mortgages: how much do you really save?
The cutting of interest rates has a direct effect on variable rate mortgagesbut the savings for those who are already paying a loan will not be so significant. According to an analysis of Facile.it, those who have a variable mortgage of 126,000.00 euros with a duration of 25 years will see a reduction in the installment of around 17 euros, going from 650 to 633 euros per month.
This benefit varies according to the initial conditions of the mortgage: those who have stipulated the loan with a very low rate could see a more marked reduction, while for those who have signed the loan in periods of higher rates, the savings will be lower.
However, the mortgage market is still dominated by fixed rate solutions, which offer greater stability in the long run. This makes the benefit of the less relevant rates for those who are looking for a new loan.
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Fixed rate mortgages: a safer choice in the long run?
Despite the cutting of the rates by the ECB, the fixed rate mortgage continues to be a safer choice for those who want to stability and predictability in their expenses. Unlike the variable rate, which follows the trend of the Euribor and can increase over time, the fixed rate guarantees a constant installment for the duration of the loan.
Today, the difference between fixed and variable rate is minimal: we speak of a few tenths of the percentage point. This means that opt for a fixed one does not involve a much higher cost than the variable, but offers greater protection if the rates return to rise in the coming years.
With the forecasts that indicate a possible rise in the Euribor after 2024, those who now subscribe to a fixed rate mortgage could benefit from still favorable conditions, avoiding the risk of future increases.
