ECB freezes holiday interest rates while cutting mortgages

European Central Bank (ECB) will close the blinds this summer without touching interest rates. The euro central bank decided to keep the official price of money unchanged at its first meeting since approving rate cuts six weeks ago, leaving rates at historically high levels, in the range of from 3.75% on deposit lines to 4.25% on main refinancing transactions. The conclave, in which the Spanish delegation was represented by Deputy Governor Margarita Delgado, acting in office after the departure of Pablo Hernández de Cos.

Decision of the European banking regulator lived up to expectations and this is in line with the messages that national governors have been sending in recent weeks. After the June fall, for which the ECB had been preparing for long, the inflation data that has arrived is not entirely convincing.

While Europe’s consumer price index fell to 2.5% last month, service inflation (heavily affected by the pace of wage increases) rose to 4.1%. This component is the hardest to satisfy across Europe, partly because of the high demand for services such as tourism and restaurants that is seen on the Old Continent.


The government has proposed NP José Luis Escriva as governor of the Bank of Spain.

Descending mortgage

The ECB meeting is taking place at a time when Mortgages fall on favorable payment reviews this has been happening since May. On the one hand, Euribor – the main benchmark used to analyze variable mortgage payments – has been falling slowly but steadily. In fact, this Thursday, the annual rate was 3.503%, the lowest record for the entire year.

The small fall in the Euribor rate comes at a time when The annual mortgage lending reviews are favourable. because it is being compared with months in which this figure exceeded 4%. For example, the average mortgage (150,000 euros for 25 years) with an annual renewal, in which the amount will be reviewed in June, will pay 846.6 euros, which is 31 less than before the extension of the installment plan (3.5% less installment plan).

We will continue to see a slight decline in mortgage lending in the coming months. However, the extent of the easing and, above all, its continuity will depend on the decisions taken by the European Central Bank at its upcoming meetings. Markets are betting that the ECB will make two more rate cuts at the three meetings remaining after the summer.

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