ECB, Lagarde warns banks: “Renegotiating variable mortgages with households is in their interest”

The Central Bank is ready to raise interest rates again by 50 points. The announcement comes from Christine Lagarde, who is asking banks to “renegotiate” variable mortgages contracted by customers. Core inflation in the euro area will remain high in the short term, says the president of the ECB in an interview with the Spanish group Vocento. Reason why «it is very probable – you explain – that we will raise rates in March. This was a decision indicated during our last monetary policy meeting. The number one of the Eurotower points out that “overall inflation has decreased in recent months and will continue to decrease in the coming months” and warns: “Inflation indexation has not helped us in the past and has generally helped to fuel a runaway inflation. Our economies have become dependent on it. I don’t think it would be a good idea to go back to this situation.”

Then, the invitation to the banks to launch measures to alleviate the rise in interest rates on borrowers and avoid problems for debtors. “I’m sure that many banks are ready to renegotiate” the mortgages, “it is in their interest” and do not “want unpaid loans in their balance sheets”. As for a ceiling (cap) on rates, requested by some political forces in Spain (and in Italy ed), the president replied that it is a matter «between creditor and debtor. I’m sure many banks are ready to reconsider the terms of the loan. And not for charity» but «because it is in their interest to have debtors» who are healthy.