The recent reduction in interest rates by the European Central Bank (ECB) has raised expectations of significant changes in the mortgage market. However, the observed effects have been limited and mixed.
While variable rates have remained largely unchanged, fixed rates have started to rise slightly. This scenario has prompted many borrowers to review their financing options, with a significant increase in requests for subrogation.
But what are the implications of these changes for borrowers and the mortgage market as a whole?
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Choosing between variable and fixed rates
Despite the ECB’s interest rate cuts, variable rates for mortgages have not shown a significant decrease, remaining around 5%. Instead, the Fixed rates have seen a slight increasepushing many borrowers to prefer fixed-rate mortgages, seeking greater stability in payments.
According to MutuiOnline.it, almost 98.9% of new mortgage requests are oriented towards the fixed rate. At the same time, the current situation has seen an increase in requests for subrogation, which represent 33.6% of total requests, with an increase of 8% compared to the previous year and 52% compared to 2022.
This trend is driven by borrowers’ willingness to move from a variable rate to a fixed rate to obtain more favorable and predictable conditions. The restrictive policies of the ECB have had a significant impact on this phenomenon, increasing interest in renegotiating contracts.
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The influence of monetary policies on disbursements
The monetary restrictions introduced by the ECB to counter inflation have significantly influenced mortgage lending, which is increased by 26% compared to 2023. Despite the reduction in interest rates, the best variable rate decreased only slightly to 4.53%, while the average fixed rate rose to 3.26%.
This scenario has pushed many borrowers to choose the surrogation to switch from variable to fixed rate, in search of greater stability. The analysis of MutuiOnline.it found that the average duration of mortgages requested in 2024 remained constant at around 24 years, while the average amount requested reached a new ten-year high of 140,924 euros.
This reflects growing consumer confidence in the housing market and future economic prospects. The average Loan-to-Value (LTV) also increased from 66% to 68%, supported by lower fixed rates.
An interesting phenomenon is the growth of “green mortgages,” aimed at energy-efficient properties, which offer more competitive rates than standard mortgages. Applications for green mortgages have increased from 3.5% of the mix in 2023 to over 15% in the first half of 2024.
This is supported by the European Parliament’s Energy Performance of Buildings Directive, which aims to reduce emissions from buildings. Green mortgages not only promote environmental sustainability, but also offer tangible economic benefits to borrowers.
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Conclusion
The ECB’s interest rate cuts had limited effects on variable mortgage rates, while fixed rates started to rise slightly. This led to a significant increase in requests for subrogation and the growth of green mortgages.
The current state of the mortgage market reflects increased consumer confidence in the housing market and future economic prospects.
