Many households face rising housing costs tied to Euribor, and the past several months have been tough for them. This group is among the main victims of the ongoing climb in interest rates driven by central banks, with monthly mortgage payments edging higher as the costs of money rise. The wish of these borrowers is simple and understandable — a decrease or at least a halt to the increases. Yet, for the remainder of the year, a broad easing does not seem likely.
Objectives of the European Central Bank
The central aim of the European Central Bank is to bring inflation down to the 2 percent target and to move closer to long term price stability. While price growth has cooled in the euro area over recent months, the June data shows the trend remains elevated at about 5.5 percent, indicating persistent pressure from energy costs, wages, and global supply dynamics. This situation keeps policymakers focused on a careful balance between tightening policy and avoiding a sharp downturn that would affect growth and employment across member states.
Lagarde’s statements on mortgages
ECB President Christine Lagarde has addressed questions about the possibility of further rate action after the next meeting. In discussions about a gradual adjustment path for rates, she indicated that a pause could occur, but it would not be automatically permanent. For households with mortgages, the messaging suggests that future moves will be data dependent, with the overarching goal of preserving price stability while supporting the economic recovery.
When will the decrease in housing loan prices be noticed?
Industry observers note that the timing of any price relief will vary. The savings banks foundation Funcas explains that the impact depends on how often mortgages are reviewed within a year. Those with biannual rate reviews may begin to see relief sooner, potentially as early as January 2024, while borrowers who review only once a year might experience relief later, possibly around April 2024. In all cases, the actual effect will hinge on the specific loan terms, lender policies, and local market conditions, along with how individual borrowers renegotiate or refinance when opportunities arise. The path to relief is uneven, but the broader trend is clear that rate review frequency matters in when relief becomes noticeable.