The European Central Bank (ECB) is at the center of attention for its possible interventions on interest rateswith the aim of stimulating economic growth at a time of moderate inflation and slowing production.
The Governing Council of the ECB will meet in December, and many observers expect a new reduction in the cost of money, which could go beyond the 25 basis points of the previous cuts in 2023. These interventions could significantly affect the markets, families with mortgages in course and the real estate sector.
What are the possible scenarios?
Advertisement – Advertising
The economic slowdown and interest rate expectations
With Eurozone inflation falling to its lowest level since 2021, attention now shifts to the risk of weak economic growth. This scenario leads to a growing debate among analysts, many of whom call for a more expansionary monetary policy.
Investors are looking with hope at a possible cut of up to 50 basis points, higher than the ECB’s recent interventions of 25 points, in an attempt to stimulate demand and facilitate access to credit for families and businesses. This measure would be a decisive signal to address the slowdown in growth and could represent a driving force for the European economy.
The uncertainty over the ECB’s future decisions, however, is causing concern among companies. In particular, the business world and many financial operators underline how the absence of a clear direction can negatively impact strategic choices and investments, especially in sectors such as construction, which are traditionally sensitive to changes in rates.
Without clear guidance from the ECB, companies fear that the economic environment will become less predictable, potentially impacting costs and competitiveness.
Advertisement – Advertising
How hypothetical cuts affect mortgages
A reduction in interest rates could represent a concrete advantage for the real estate sector and for families with variable rate mortgages. According to some estimates, a further 0.25% cut in rates it could save you between 13 and 30 euros per month to many Italian families with active mortgages, especially those with variable rate mortgages.
This prospect could support real estate demand and encourage new financing, facilitating access to the first home and easing the installments of those who already have an ongoing mortgage.
However, it is important to also consider the risks of an overly expansionary monetary policy.
While low rates favor growth, on the other they could lead to imbalances, such as excessive household indebtedness and greater dependence of businesses on subsidized financing conditions. Furthermore, a prolonged gap between European and US rates could impact the competitiveness of Eurozone companies, making international markets more complex.
These aspects raise questions about the ECB’s future strategies and how to balance the need to support economic growth without generating new vulnerabilities in the European financial system.
