European Central Bank (ECB) chief economist Philip Lane warned that homeowners will face higher mortgage payments as the delayed impact of high interest rates begins to take hold, on Thursday, the 15th of February, reports Politico.
Given that many Europeans had the chance to get fixed-rate mortgage deals, they have not been largely affected by last year’s record interest rate hike, when the ECB raised interest rates from zero to 4% in just over a year.
ECB Chief Economist Philippe Lane said that
more and more people will be affected by interest rate changes.
Around 30% of fixed-rate mortgages will expire this year, leading to price revisions, despite the fact that interest rates have not been raised since the summer and the market expects a rate cut, the ECB’s chief economist said.
Higher interest payments mean more difficulties for borrowers and also increase the risk of loan defaults, which can affect the stability of banks, Lane added.
With fixed-rate mortgages set to expire, borrowers in different European countries will feel the impact differently, with around 70% of loans maturing in Spain and Italy and only around 10% in France and Germany.
In December, around 80% of mortgages in the eurozone were fixed. Many of these loans were signed during a period of low interest rates, when borrowers were more optimistic, said Lane.
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