September 26, 2022

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‘Increases up to €90’: EU hawks ‘bomb’ on mortgages

“hawks” European Central Bank Hold the plow straight in the front of the high rate There will be a battle in the Eurotower board on Thursday to understand whether the analyst consensus for a 75 basis point increase will be confirmed or if penalty takers will win it ahead of the increase by another 25 points. A +1%, instead of +0.75%, would be the second blow after July’s increase was 0.5% instead of 0.25% and would make the institution lead it Christine Lagarde In terms of fighting inflation even surpassed the rise in the US Federal Reserve.

“Fellowship that always requires on the board of directorsEurotowerNext Thursday it will be undermined by the demands of more hawkish central bankers,” he points out printing. In the foreground are Estonia, Latvia, Lithuania and Austria, with the inevitable external support of the Netherlands which prefers not to reveal itself as “the hawk” More divisive. With European inflation at 9.1%, a hot autumn approaching, an ongoing energy crunch and the threat of production shutdowns on the way, many countries are taking the ECB’s new 2% limit target more seriously. cost of living. With this in mind, “the President of the Bundesbank, Joachim Nagel, has stressed several times in recent weeks that it is necessary to take a categorical approach against inflation, before it is too late. And translated, more fundamental increases in the cost of money.” However, Germany does not want to suggest first-person.

And in recent weeks, Germany has put a clear and clear line in the forefront of fighting inflation through “spread.” Isabelle SchnabelAnd the A member of the European Central Bank’s Executive Committee, who stressed at the central bank governors meeting in Jackson Hole a week ago that the bank would be willing to raise funding costs to a level that would lead to higher unemployment and possibly a recession to fight inflation.

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this possibility, Even the official publications like financial times Damage is very likelyIt could have a significant impact on the current accounts of European citizens, and Italians in particular. The first interface that is looked at, of course, is an interface growth, Given that as interest rates rise, the European Central Bank will end the purchase of securities which will make the cost of debt servicing more stressful by subtracting resources from investments and economic recovery.

Then there is a big problem in Mortgages. In recent years, home buyers have been able to take advantage of historically low interest rates in a positive direction. In Italy from 2019 to 2022 they are by 9% to reach 417 billion. The music changed in July, with the previously flat zero rate rising to 0.5%, while the previously negative deposit rate returning to zero and the loan margin rate rising to 0.75%. If it rises successively to about 1-1.5%, 0.5-1% and 1.75%, the fixed matrix rate can pass for 10 or 20 years, with a weight of Euribor about 0.3% per year, from 2.4-2.5% overall to 3.5- 4.5% max, which, thanks to the effect of inflation, makes it relatively cheaper Variable rate selection Investors in easy money years are strongly discouraged by the European Central Bank. For a 30-year floating rate loan of €250,000, simulations were carried out commissioned by Republic They talk about a monthly increase of about 90 euros. State coffers will also be affected by the guarantees offered to young people and the protection dynamics they have encouraged.

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In this context, the increase in spending for many citizens, along with discouraging investment and the ensuing credit crunch and corporate lending, sovereign bond tensions and doubts about growth, suggest that A very sudden rise in interest rates by the European Central Bank It can be very ineffective. And that the timing of inflation-scared hawks is unwarranted and only risks exacerbating problems: preferring monetary tightening in the event of uncertainty, some depressive effects are created on the real economy at all levels without any certainty to fight against. Inflation is mainly due to external factors such as energy. With the only risk of turning Europe back into the trap of a combination of high inflation and stagnation.