As expected, the ECB cut rates by 25 basis points today. The installment of variable mortgages will consequently lighten. But by how much? The savings are between 13 and 30 euros per month. For a 20-year mortgage of an amount between 100 thousand and 200 thousand euros, the saving on the monthly installment varies between 13 and 27 euros, equal to a lower annual expense between -156 and -324 euros, analyzes Codacons.
But if in 2024 the drop for a standard mortgage was just over 36 euros, the good news is that the indices should continue to decrease in the coming months too: analyzing the performance of the 3-month Euribor futures (updated to 7 October 2024), Facile.it has calculated that the installments could drop by around 38 euros by the first months of 2025 and, overall, by around 95 euros by the end of next year. Data in hand, therefore, the installment of a standard mortgage – from 126,000 euros in 25 years, LTV 70%, initial Tan 0.67% (Euribor3m+1.25%) subscribed in January 2022 – would go from 714 euros in October 2024 to 676 euros at the beginning of 2025, reaching around 620 euros at the end of next year.
Wait for the decline or try to substitute?
If, as mentioned, the prospect of variable rates is to continue to decline over the next year, a quicker opportunity to reduce the installment is represented by subrogation. “In this market phase the banks are offering really interesting fixed subrogation rates and this represents an opportunity not only for those who have a variable mortgage and want to switch to a fixed one, thus reducing the installment and blocking it for the rest of the repayment plan, but also for those who already have a fixed loan underwritten at less advantageous conditions than the current ones”, explain the experts at Facile.it.
Suffice it to say that, for example, just 12 months ago the best fixed rates for a standard mortgage started from a TAN of around 3.80% with an installment of around 650 euros, while today, as mentioned, the subrogation rates start from an installment of 584 euros.
For those who choose a mortgage today: fixed or variable better?
Although, in general, there is no absolute right or wrong choice between fixed and variable rates, at the moment market conditions are clearly in favor of fixed rates. Looking at the best fixed rate offers available online for a standard mortgage, TANs start from 2.79%, with an installment of 584 euros. For variable rates, however, the best offers start from a TAN of 4.10%, with an initial installment of around 665 euros and a difference of around 80 euros compared to the best fixed rate offer.
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