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“Mortgage interest rates will stay low.”
05 July, Avvenire
There is still a lot of uncertainty concerning the end of the quantitative easing (QE) through which the ECB made credit extremely convenient, mortgage loans included. Stefano Rossini, Mutuisupermarket Ceo, advises to not scared though.
With the end of the expansive monetary policy by the ECB, will we assist to a hike on interest rates for new mortgages?
It’s likely, but it won’t happen immediately. If we look at the Euribor futures, we can see how investors are still expecting the Euribor to be below 1% until mid of 2023. Investors understood that the ECB would move slowly, and many stressed how Mario Draghi opened to the possibility of re-introducing the QE if necessary.
Hence, the interest rates will stay low for a long time?
Looking at the news coming from Frankfurt, it seems like it. Basically, there is no reason for worrying since there are no abrupt changes in the rates at the horizon.
The recovery of real estate seems to have slowed down.
Let’s not forget that the sector has been growing for the last four years in a row. After having plummeted during the recession, sales have been rising since 2013. They decelerated now: in the first quarter of 2018, transactions grew by 4.3%, slightly below the 6.3% reported in the last quarter of 2017. It’s normal, and several factors are supporting the market.
Do you refer to the low costs of mortgages?
Absolutely: the spread is close to zero for fixed rate mortgages. There is also the price factor to consider. Between 2011 and 2017, prices dropped by 22%, and in 2017 we reported a 4.5% decrease of the price per square metre. Even with significant differences between the various regions of the country, prices will continue reducing.
Is the mortgage market also slowing down?
Yes, the market has been reducing since the second quarter of 2017, and the reduction is more dramatic quart after quarter. The reason is the reduction in clients asking for a subrogation. Subrogations supported the growth of the market, but now who had to change mortgage already did it. Hence, there are only new mortgages at present.
How are banks reacting?
They all have growing mortgages budgets. There are no margins on prices, meaning that they’re expanding regarding instalment-return and loan-property value ratio. For instance, loans for over 80% of the property value are back.
Source: Avvenire
Translator: Cristina Ambrosi