Mortgages at risk soaring: if the ECB raises rates by another quarter of a point installment to + 275 euros

If on June 15th the ECB were to announce a new increase in the cost of money by 25 basis points, according to the simulations of Facile.it, for those with an average variable-rate mortgage, the increase in interest rates could translate into an increase in the installment which it would bring the total burden to almost +275 euros compared to the beginning of last year (+60%). Furthermore, the note from Facile.it continues, there is further bad news: the interest rate race may not be over given that, according to market expectations, the Euribor peak will be reached next September. For the analysis, the Facile.it comparator examined a 126,000 euro variable-rate loan with a 25-year repayment plan signed in January 2022, examining how the installments have already grown and how they could vary following a further rate hike by the European Central Bank. The starting rate (TAN) for January 2022 was 0.67%, corresponding to a monthly installment of 456 euros. Following the decisions of the ECB, then, in June 2023 it reached 4.67%, bringing the installment of the same mortgage to 713 euros; installment which, with a further increase of 0.25%, could even reach 731 euros, 60% more than the initial one. “To understand how the borrowers’ installments will change in reality, we will have to wait to see how the Euribor will actually move”, explain the experts of Facile.it. «It is good to remind those who are grappling with price increases, however, that there are various solutions available such as subrogation or renegotiation of the loan. In any case, the advice is to get help from a consultant so as to identify the option that best suits your needs», they add. Looking at market expectations (Euribor futures updated to 7 June 2023), the note from Facile.it continues, it emerges that the increases could still continue; experts predict that the 3-month Euribor will reach its peak in September 2023 reaching 3.84%; if these forecasts were correct, the rate of the average mortgage examined would approach 5.10%, with an installment of around 743 euros, or more than 285 euros more than that of January 2022. After September – adds the note – the the trend should finally reverse and rates will begin to fall, so much so that the June 2024 prices estimate the 3-month Euribor at around 3.42% At the end of June, if there is no news in the next few days, the facilitated guarantee conditions will expire up to 80% for first home mortgages for young people, underlines the note from Facile.it. Since it was introduced, the measure has allowed many under 36s to access advantageous conditions for taking out first home mortgages, so much so that – according to an analysis by Facile.it – ​​if in the first half of 2021 applicants under 36 represented 43.4% of total applications for first home loans, between January and May 2023 this value reached 51.3%. “If the Government does not extend the validity of the subsidy again in favor of young borrowers, we will have to wait to understand how the credit institutions will behave”, continue the experts of Facile.it, for whom “the loss of this opportunity it would be worrying and it would be the kids who would suffer, especially in such a delicate economic phase; the instrument was very important for the under 36s as it gave them concrete and greater possibilities to buy a house, consequently also supporting the real estate market”.