ECB rate hike: what changes for those applying for a mortgage

The European Central Bank has raised interest rates by 25 basis points, equal to 0.25 percentage points. It is the first increase in almost three years.

With this decision, the deposit facility rate rises to 2.25%, the rate on main refinancing operations to 2.40% and the marginal lending facility rate to 2.65%.

The decision is particularly relevant for those considering buying a home with a mortgage, as it may affect the conditions applied by banks, the comparison between fixed and variable rates and the long-term sustainability of the monthly instalment.

The impact of the rate increase varies depending on the type of mortgage and the applicant’s situation.

For those who have already taken out a fixed-rate mortgage, the instalment remains stable. For those who need to apply for a new mortgage, the key point is to understand which solution is best suited to their financial and family situation.

The choice depends on several factors: the amount requested, the duration of the loan, available income, employment situation, assets, savings, household composition, the property to be purchased and the monthly safety margin.

Mortgages: fixed or variable rate?

A fixed rate offers a stable monthly instalment for the entire duration of the mortgage. A variable rate, on the other hand, follows the trend of the reference indexes and may therefore change over time.

For variable-rate mortgages, the main reference index is Euribor, while for fixed-rate mortgages the reference parameter is Eurirs, which is linked to market expectations over medium- and long-term maturities.

The comparison between fixed and variable rates becomes central again in a phase in which interest rates are moving. The choice should be assessed by considering the initial cost, the duration of the loan and the ability to sustain any future changes.

To make a more informed decision, it is useful to start with a mortgage consultation.

With Toscano Mutui, we guide clients through a complete process that starts with an assessment of their personal situation, orienting the mortgage choice according to the purchase project.

Our consultant then handles the comparison with credit institutions, analysing the available solutions and identifying the product best suited to the client’s profile.

The objective is to arrive at the most coherent solution for the client’s needs, taking into account the sustainability of the transaction over time.

Knowing your real budget in advance allows you to approach the purchase with greater awareness, from the property search through to the mortgage application.

For a dedicated consultation, you can contact the Toscano Mutui team.