European Central Bank to Keep Interest Rates Unchanged Despite Mortgage Relief Predictions

2024-07-18 12:15:54

European Central Bank (ECB) The blinds will close this summer regardless of interest rates. The euro’s central bank has decided to keep the official price of the currency unchanged in its first meeting since the rate cut approved six weeks ago. In this way, rates remain at historically high levels, with a range that goes from 3.75% for the deposit facility up to 4.25% for main refinancing operations. Conclave in which the Spanish delegation was represented by the deputy governor, Margarita Delgado, acting as interim after the departure of Pablo Hernández de Cos.

Decision of the European banking regulator he has met expectations and it is in line with the messages that have been sent by the national governors in recent weeks. After the fall in June, which the ECB was paving the way for long before, the inflation data that came in is not entirely convincing.

While European CPI fell to 2.5% last month, services inflation (highly impacted by the pace of wage rises) rose to 4.1%. This component is the most difficult to seat across Europe, partly due to the strong demand for services such as tourism or restaurants that can be seen on the Old Continent.

Downward mortgages

The ECB meeting comes at a time Mortgages are falling because of favorable payment reviews which has been happening since May. On the one hand, the Euribor – the main reference used to review variable mortgage payments – is slowly but steadily falling. In fact, this Thursday the one-year indicator stood at 3.503%, the lowest record of the entire year.

The small drop in Euribor takes place in a context where The ongoing annual mortgage reviews are favourable because it begins to compare with months in which this indicator exceeded 4%. For example, an average mortgage (150,000 euros for 25 years) with an annual update that reviews the amount in June will pay 846.6 euros, 31 less than before the installment renewal (3.5% less installment).

In the coming months we will continue with small reductions in mortgages. However, the extent of the relief and, above all, its continuity will depend on the decisions taken by the European Central Bank in the upcoming meetings. The markets are betting that the ECB will undertake two more cuts in the three remaining meetings after the summer.