ECB rate hike, now the installment of variable mortgages risks soaring up to 60% more

The European Central Bank raised the cost of money by 25 basis points to 4%. This is the highest level for 22 years. According to economists, today’s increase could be the penultimate increase of the European Central Institute. The move serves to counter inflation which still remains three times higher than the 2% target. The effect of this new increase will immediately be seen on household pockets. In particular, the mortgage installments of those families who have entered into a variable rate contract will rise. The increase will be around 20-30 euros per month, based on the amount requested in financing. Today’s ECB increase adds up to a long series of increases that began last summer which have a heavy impact on mortgages. According to the simulations of Facile.it, today’s increase in rates brings the overall burden on the variable to almost +275 euros compared to January 2022 (+60%).

With the new season of increases by the ECB, the prices of fixed-rate mortgages have also risen, but only for the new ones, those already in place will not see any changes. The positive news is that the IRS, the reference index for this instrument, has been at a standstill for months and seems insensitive to the ECB’s moves. “He assumes that the hikes won’t last,” says Guido Bertolino, MutuiSupermarket’s business development manager.

Today’s decision by the ECB will also have consequences on loans requested by companies. In the coming months, businesses will have to deal with an unfavorable environment, characterized by tighter credit conditions, as well as sluggish domestic demand. Furthermore, after a general increase in margins in 2022, firms are likely to see declines in operating profitability due to the combined effects of a gradual decline in core inflation and rising unit labor costs. According to experts, the sharp increase in business insolvencies recorded since the beginning of the year in most advanced economies is set to continue, and even intensify, in the coming months.