2023-11-09 23:37:08
The European Central Bank changed the course of monetary policy by raising interest rates. The goal is to return inflation to 2%. In order to reach that goal they want to slow down the economy with more expensive loans. These decisions have made loans increasingly expensive. And a good example of this has been the interest at which mortgages are paid. The Spaniards still expect them to rise more, specifically 35% in the next 12 months.
According to the Consumer Expectations Survey (CES) of the European Central Bank (ECB) for the month of September, citizens They predict that the average interest on mortgages will be 5.2% in the next 12 months. This increase in price would occur despite the pause that the organization made in the path of rate increases in the last meeting in October.
On the other hand, The average interest on mortgages stood at 3.85% in September, 75% more than in the same month of the previous year, as shown by data from the Bank of Spain. Due to the evolution of mortgage interest rates in the last year, it is estimated that the future will be the same. But the most important difference is that the ECB has raised interest rates very quickly, a speed never seen in the history of the organization. This is why mortgages have become so aggressively more expensive.
From now on, mortgages will continue to rise, but in a more gradual way. In the last year and a half, the ECB has raised rates 10 consecutive times and at this last meeting decided to pause. However, he did warn that rates will remain at a high enough level long enough to return to 2%. In this way, everything indicates that, if there are no changes in the data, rates will remain at 4.5% for a long time. With this, it is striking that Spaniards think that interest rates will rise by 35%, but this survey was carried out in September, a month before the ECB decided not to touch the price of money.
The 5.2% interest that Spaniards expect is the highest level that the survey has recorded. Generally speaking, eurozone citizens also expect rates to be at that level on average. However, differences are seen between the member countries that have participated in the survey. Italy is the country where these interest rates are highest, above 6%.
For their part, the citizens of Belgium are the most “optimistic”, placing the interest at 4.75% for the coming months of the year. Germans have the same perception as Spaniards and place the mortgage interest at 5.2%. At this point, it is striking that the price of these interests has increased greatly, since in June they placed it close to 4.5%. The French and Dutch expect interest to be below 5% next year. In the case of Dutch citizens, their perception has improved, since in June, they placed it above 5%.
In general terms, Consumers expected their home prices to increase by 2.2% in the next 12 months, slightly below that of August (2.3%). Expectations for 12-month mortgage rates rose further to 5.4%, from 5.2% in August. This marked its highest level since the survey began and was 0.6 percentage points higher than at the end of 2022. The increase was widespread across all age and income groups, with the exception of the highest income group. The perception of access to credit during the previous 12 months decreased significantly compared to Augustas well as expectations of access to credit during the next year, both reaching the tightest levels since the survey began.
This increase in the cost of mortgage loans has caused the signing of new mortgages to fall. The number of mortgages created on homes fell by 22.7% last August compared to the same month in 2022, totaling 28,344 loans, with an average interest rate that continued to rise, reaching 3.25%, its highest figure since July 2016, according to data released by the National Institute of Statistics (INE).
The year-on-year decrease in August confirms that home mortgages have had seven months of negative rates, although the rate in August was more pronounced than that recorded in July (-18.8%).
Economy
The mortgage market has changed in the last year and a half. The European Central Bank’s decision to raise rates has made mortgages more expensive and […]
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