The forecasts have come true, the price of money continues to rise, and with the new ECB rate hike, these are now at 4%. And we must add that Euribor has also broken the 4% barrier. A scenario that portends a cooling off in the real estate sector, even more considering that forecasts do not currently point to a rates reduction nor the reference index.
After the rate hike, money hits record highs
Eurozone interest rates had not reached 4% since the year 2000. They did not even come close to that figure during the 2008 crisis. Last year, they were at 0%, and now everything indicates that there will be more increases, the next one in the next ECB meeting in July.
From then on, everything is conjecture, but the truth is that the European Central Bank considers that inflation in the eurozone continues to be too high. In this way, estimations don't reject there may still be a new rate hike by the ECB in the three meetings that the organization will hold after the summer.
What happens with the Euribor? Assuming its evolution goes along with interest rates, it could continue to rise. However, in this case, it does not seem likely to reach the 5% exceeded in 2008.
Foreseeable evolution of the real estate market
The property market is sensitive to each new ECB rate hike. In fact, in recent months, there has been some cooling. The mortgage firm in March fell by almost 16% in the annual rate, according to data from the National Institute of Statistics (INE). So did the Housing Price Index, which stands at 3.5%, compared to 8% just a year ago.
Uncertainty, inflation and each new ECB rate hike make access to financing difficult for a large part of the population. The effort to buy a property is increasing, and this causes the demand to retract.
On the one hand, many buyers are considering delaying buying until they have a proper financial cushion that allows them to borrow less. On the other, banks are becoming more demanding in granting mortgage loans.
All this means fewer opportunities also for the owner who wants to sell. Under these circumstances, many are to negotiate the price to sell their properties in a cooling market.
Now is the moment to sell or buy
The foreseeable evolution of the real estate market after the new rate hike by the ECB advises not delaying the decision to sell or buy. The owners can benefit from still-high prices and a scenario where there aren't significant adjustments yet.
For those who want to buy, waiting also carries risks. If the ECB decides to raise the price of money again, mortgages will become even more expensive. Therefore, financial institutions may be even more restrictive in lending money.
In short, delaying the decision can mean losing money for sellers and buyers. On Spainhouses.net, you will find a great real estate offer if you're to buy a home. And if you want to sell, you can post your property ad for free.