The average mortgage rate is at its lowest level in two years. The average 10-year rate with NHG is now 3.78%, compared to 4.04% in September 2022.
The ECB is expected to lower interest rates again in September by 0.25%. As a result, De Hypotheker expects this slight decrease in mortgage interest rates to continue for the time being.
Fairly stable
Mark de Rijke (photo), commercial director of De Hypotheker: “In 2024, the average mortgage interest rate remained fairly stable, although there has now been a slight decrease for seven weeks in a row in the various fixed-rate periods. For example, the 20-year interest rate with NHG was still at 4.27% two years ago; it has now fallen to 4.11%. The 30-year interest rate has fallen from 4.38% in September 2022 to 4.25%. Mortgage interest rates have risen sharply since the beginning of 2022, mainly due to higher inflation expectations in the eurozone, which caused capital market interest rates to rise. The average 10-year mortgage interest rate with NHG was 1.11% at the beginning of 2022 and rose to 4.27% in 12 months. In 2023, the mortgage interest rate stabilized again at an average higher level.”
Further decline
This year, the decline in mortgage rates started in early July after a reduction in the capital market rate, which followed the ECB’s decision in June to lower the policy rate to 3.75%. The central banks’ policy is having the desired effect now that the economy is cooling down. De Rijke: “This is also visible in the inflation figures in the eurozone; inflation has fallen to 2.2%, which is almost at the target level of 2%. All signals point to another reduction in the deposit rate from the ECB in the coming month. The deposit rate has a major impact on interest rates on financial markets, which in turn determine mortgage rates. Since July, mortgage rates have now fallen by an average of around 0.2 percentage points. We expect the average mortgage rate to fall further in the coming period.
Positive development
“Mortgage interest rates are now at their lowest point since September 2022. This is a positive development for home buyers,” says De Rijke. “Our data shows that mortgages with short and medium-term fixed-rate periods are gaining popularity, especially among first-time buyers. Many young home buyers want to borrow as much as possible in this overheated housing market and prefer a 10-year interest rate. For this group, it is beneficial that their borrowing capacity increases when interest rates fall. With the expected announcement of a new interest rate cut by the ECB, capital market interest rates may fall further, with fixed mortgage rates following with some delay. However, competition on the mortgage market is fierce and due to the pressure on margins, lenders are keeping a close eye on each other. We expect mortgage interest rates to fall further, but that this decline will remain modest for the time being.”
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