I’m a Mortgage Director, Here’s What’s Happening to Interest Rates in the Summer

The Euribor rate, calculated by the European Central Bank (ECB), becomes a benchmark index for many banks for floating rate mortgages. Therefore, the cost of these loans is very important because if the Euribor rate rises because banks charge higher interest rates to other banks for lending them money, the mortgage will become more expensive. On the other hand, if this indicator falls, the mortgage will become cheaper.

On June 6, the European Central Bank (ECB) cut interest rates to 4.25%. the decrease was 0.25%. No changes have been noticed so far, and this June 2024 closed at 3.65%, just 0.03 points below the value recorded in May (3.68%).

Simona Colombelli, Mortgage director of comparator and mortgage consultant iAhorro explained that “Early this year, Euribor fell much more than expected. compared to what it was in the last quarter of 2023. This resulted in stability this indicator at levels that, although high, still lower than those recorded last year on the same dates.

An iAhorro representative assured that he does not expect any major changes between now and the last quarter of the year: “Summer is not usually a busy period in the mortgage and real estate markets: Banks are left with minimal services, and citizens go on vacation and prefer to leave these issues “back to school”. This means that far fewer loans are signed in July and August than in any other month of the year.”

The European Central Bank will hold its last meeting before going on holiday on 18 July. and Colombelli believes that “most likely, no changes in interest rates apply, but keep them at the current level of 4.25%.”

However, he explained thatIf Lagarde surprises everyone and decides to go for another cut, he does not believe it will be more than 0.25 points. and “it’s hard for banks to change prices and rates with such a small drop two weeks into August; “It’s not customary to make changes in the summer because it’s not worth it.”