La European Central Bank ha lowered interest rates by 0,25%, bringing them to 3,65%. Although widely expected, this move brings with it a small dose of relief: the rates of the adjustable rate mortgages they should alight, and who is looking for a new fixed rate mortgage could find condizioni more advantageous. Lando Sileoni of Fabi emphasizes that the rate cut will lead to further savings on fixed-rate mortgages, which remain more convenient than variable-rate ones, since the one-month Euribor is still above the Eurirs. Furthermore, Fabi predicts an overall saving of over 70 thousand euros (-19,3% compared to 2023) for those who sign up for a 25-year mortgage of 200 thousand euros. Even the consumer loans, such as those for cars and household appliances, will see a reduction costs, offering families greater opportunities to save on financing.
In addition to mortgages, the rate cut has several effects. For savers it entails a decrease of remuneration of deposits, which had risen to almost 3,6% from the previous 0,9%, and of the returns on variable rate securities, like CCTs, with lower coupons for BTP Italy. For the sake of State, instead, the reduction in the cost of debt could lead to significant savings in public coffers, estimated at billions of euros in the coming years. But how much does this cut actually impact mortgages?
The impact on variable rate mortgages: how much will the rate change?
According to a study by the National Consumers Union, a reduction in rates of 25 basis points, considering the latest APR communicated by Bankitalia (3,94%), entails a monthly savings of approximately 18 euros for those who have recently signed up for a variable rate mortgage. This translates into an annual saving of approximately 216 euros. However, as the mortgage maturity approaches, the savings may decrease since the capital portion progressively increases.
It is worth noting, however, that the average rates of variable mortgages have gone from the peak of 4,92% in November 2023 to 3,94% in July 2024, after the first intervention by the ECB. According to Codacons, if the trend continues, savings could increase to 38 euros per month by the end of the year and even 85 euros per month by June 2025.
How will the rate cut affect fixed-rate mortgages?
The rate cut will also have an impact on new mortgages and on fixed rate mortgages. For new loans, the conditions offered by banks could become more advantageous. The Eurirs indices, which guide fixed-rate mortgages, have already shown a drop of about twenty basis points in recent months. Currently, it is possible to find rates (Taeg) below 3%, a novelty compared to the high rates of the beginning of the year.
Stable at around 3,20%, the average fixed rate for new mortgages is particularly competitive compared to what we have seen in the last two years, when rates had reached levels of up to 6%.
Consumer credit rates: also falling for cars and household appliances
The interest rate cut will also have positive effects on the Consumer credit. Average rates fell to 8,58%, after peaking above 14%, and could fall further to 8,25%. This means that, for acars from 25 thousand euros purchased entirely in installments with a 10-year loan, the total cost could be around 37.860 euros, with a saving of over 11 thousand euros compared to 2023. Even for small purchases, such as a washing machine from 750 euros, a saving of approximately 161 euros (-14,6%) is estimated in the next few months.
What to expect?
THEeffect of the rate reduction it won't be immediate e will vary between different banks. However, it is clear that the ECB's interest rate cuts will lead to more favorable conditions for those seeking a new mortgage and for those already holding a variable-rate mortgage. Furthermore, the trend towards further reductions could continue, making this a particularly advantageous period for renegotiating mortgage terms or evaluating new lending opportunities.
