31 Faced with the movements in rates and the rise made in recent days by the ECB on interest rates, the fateful question relating to mortgages returns: which one should you choose?
After the move by the ECB, there are in fact several accounts to be done. In fact, if index-linked mortgages are still decidedly cheaper, this advantage that still exists is likely to vanish in a very short time, in the event that rates continue to rise. Basically, after the move by the ECB, consequences that are not at all pleasant on several fronts could occur.
However, the problem should not concern all mortgages but only the variable ones indexed to the ECB rate, which are only a small part of the total. That is to say of the particular products that, with the same spread, usually all banks offer as an alternative to products linked to Euribor. However, these are options that have so far met with very little interest from customers.
In any case, the fact remains that despite the increase, variable rates continue to cost less than fixed rates. But this does not mean that they are the most convenient of all. Certainly, in fact, the level of risk that there is assumed is greater than those at fixed rates, much higher but with the certainty of how much we will continue to pay for the duration of the loan.
In fact, to understand which option to go to, we must keep in mind that the increase in rates of 50 cents wanted by the ECB, after 11 years of lowering, has already been discounted by the Euribor, which in the last month recorded an increase of 25 cents for the one-month parameter and 45 cents for the quarterly report. However, the cost gap between variables and fixed remains quite wide.
Mortgages, which ones to choose: the possible hypotheses according to the first simulations
If you try to make a simulation on the mutuiOnline.it website, the data, updated as of July 20, assuming a loan of 150 thousand euros for the purchase of a house worth 200 thousand, speak of a fixed rate at 20 years with a cost average of 3.10 per cent, equivalent to an installment of 839.43 euros. While, on the other hand, as regards the variable, we are talking about a rate equal to 0.97 percent with an initial installment of 687.84 euros. In real terms, there is talk of 152 euros of difference per month, not insignificant.
On the thirty-year loans, the fixed ones amounted to 3.08 per cent, for an installment of 638.90 euros, and the variable ones at 1.08, with an initial installment of 487.99. Here too, the difference is still high, as long as we take on the unknown factor on the cost of money. Basically, the choice of the variable is currently a possibility to be taken into consideration only in the case in which you are inclined to risk, but you also have your back covered in the event of possible significant increases in the Euribor.
However, today we generally try to avoid too negative scenarios, but it should always be remembered that in 2008, the three-month Euribor ended up reaching a good 550 cents, with rates approaching 7%. Hoping that a similar situation does not recur.
–
