It was a decision that had been expected for some time and has now become a reality. It was the first drop in interest rates by the European Central Bank (ECB) in eight years, a reduction of 25 basis points that will inevitably impact the real estate sector and mortgages.
What experts agree on, however, is that it will not foreseeably mean a sudden change in trend. They suggest that interest rates could continue to fall. However, it would be gradual, and mortgages will not return to values from a few years ago, at least for now. Regarding the real estate market, there will be some adjustments.
Repercussions of the ECB's interest rate cut
The Euribor, although at high figures, has remained stable for a few months. The drop in interest rates will predictably cause the benchmark index to begin a downward path, although moderately.
Between now and the end of the year, the evolution of Euribor would largely depend on whether the ECB decides to lower interest rates again and by what percentage. Therefore, those with a variable-interest mortgage will notice a slight respite in the payment after several years of increases.
For those who plan to take out a mortgage, the reduction in interest rates means access to financing will be easier. We will have to wait for the banks' reaction to know how they modify their offers.
Some entities had already anticipated this drop in interest rates by offering products with better conditions. Nevertheless, if the money's price falls again in the coming months, banks could move again to attract new buyers encouraged by the situation.
How the real estate market will respond to lower interest rates
Despite the high interest rates, the real estate market has not suffered a drastic cooling. High demand and low supply have helped to prevent a sharp fall.
In that sense, the drop in interest rates does not seem to have a significant impact on the evolution of the real estate market. It could be in the sense that more affordable mortgage payments can mean greater demand and, with it, an increase in prices that, in any case, have not stopped rising for months.
Therefore, although further interest rate cuts are not ruled out before the end of the year, waiting to buy a home will not always be the best decision. If you have savings, it may be the right time to take the step.
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