Decrease the cost of money in the euro area. This is the purpose of the cut in the reference rate from 1,50% to 1,25% announced yesterday by the president of the European Central Bank (ECB) Mario Draghi. The first major effect of this move was the fall in the rates of the main Euribor maturities, the interest that European banks apply to each other. The quarterly maturity was set today at 1,488%: a drop of 1,58% compared to yesterday and the lowest in 5 months. But the Euribor is important for Italian savers because variable rate mortgages often follow the trend of this interest rate. So good news for those who have already subscribed to a mortgage of this type who will see their installment decrease from next month.
Nothing changes, however, for those who have stipulated fixed rate mortgages. For those intending to buy a house and ask for a loan from a bank, given the difficult moment Italian credit institutions are experiencing, it is probable that they will take advantage of it to increase their income, increasing the fixed surcharge and not favoring customers. Obviously every choice depends on the individual bank.
As regards the Consumer credithowever, it is unlikely that there will be any changes. Banks are not obliged to align with the new rates and being a riskier sector than others, in a time of difficulty like this, credit institutions probably won't make any substantial changes.
The question is different deposits. Banks need to hold capital for medium-long periods of time and lowering rates could help savers obtain more advantageous interest rates. But even here, it depends on the conditions of each individual bank and on the negotiating skills of each saver.
