Variable Rates See Significant Drop

Variable mortgage rates have experienced a notable decrease. ⁣According to data from Mutuionline.it,the average rate on variable mortgages with 20- and‍ 30-year terms ‌has fallen by⁣ over one percentage point compared to figures from a year ago. In March of the previous ​year, these rates averaged⁤ 4.84%. Now, the observatory reports⁣ an average of 3.69%.This translates to a potential monthly savings of up to 86 euros on a 140,000-euro mortgage with a ‌20-year term – reducing the monthly payment ⁢from 912 euros to 826 euros. Over the‌ life of the ⁣loan,⁤ this ⁤could result in⁤ savings exceeding 20,600 euros.

Fixed Rates Still Offer Competitive⁤ Advantage

Despite the decline in variable rates, fixed-rate mortgages currently maintain a competitive edge. In March, the average fixed rate stood at 2.82%,resulting in a monthly payment of 764 euros. This is​ 62 euros less than ⁣the current average variable rate, potentially saving borrowers nearly ‌15,000 euros over the mortgage term.

The trend in fixed-rate mortgages tends to⁤ mirror⁣ inflation.The ⁢rates, which began‌ to decrease substantially in late 2023, hovered around 3% on average during‍ the first⁢ part of⁢ the previous year. In March 2024, a fixed-rate mortgage with similar parameters carried a monthly payment of 778​ euros (Tan ⁢3.02%), 14 euros higher than today, equating to roughly 3,350 euros more over the loan’s duration.

The Gap Narrows as Euribor Declines

While fixed rates remain generally more favorable, the gap‍ between fixed and variable rates has been gradually ‌shrinking in recent months. ‌Variable rates continue their downward trend, while fixed ‍rates⁣ have remained relatively⁤ stable. The​ ECB⁤ rate cuts ​have caused⁣ the‍ 1- and 3-month Euribor rates – key benchmarks for variable rate mortgages ⁤– to fall by over 150 basis points in the past year. These rates have now dipped below the 20- and 30-year Euris⁤ rates,which serve as benchmarks for fixed-rate mortgages,for the first time since early 2023.

Surveys​ conducted‌ on March‌ 28 ⁣indicated that the 1-month‍ Euribor rate had fallen​ to ⁤2.34%, and the 3-month⁢ rate to 2.33%.‍ Earlier in March, the 30-year IRS rate reached⁢ 2.64%, and the 20-year rate​ hit 2.77%, with values stabilizing as then.

Future Projections and Influencing Factors

Euribor forward‌ curves suggest that ⁣the ‍downward trend will persist through the end of 2025, with‌ indices potentially falling below‌ 2%​ between⁢ September‍ and October. Projections for the 30-year Bund, a key benchmark for 20- and 30-year IRS rates, indicate a stable ‌situation ​until December.‌ However, ‌the ​current market surroundings makes accurate forecasting ⁣challenging.

The spread applied by banks to reference indices​ will also‍ play a crucial role ​in shaping mortgage interest rate trends. Currently, credit institutions favor fixed ⁣rates, applying a narrower spread compared to variable rates.⁣ Historically, the opposite has been true, with⁤ banks charging a higher differential for fixed-rate loans. If this pattern were ⁤to re-emerge, variable ‍rates could regain competitiveness more quickly, potentially leading to a faster⁤ rebalancing with fixed rates.

Expert Opinion

According⁢ to Nicoletta Papucci,a spokesperson for Mutuionline.it,”In March,the gap between the average of fixed and variable rates ⁢increased ‌to 87 basis points (from 79 in Febuary),despite the fact that the Euribor dropped under the ⁤IRS for the first time from March 2023. This makes it clear that the rebalancing of the two ⁣rates​ is possible at this moment,but ​depends on the commercial⁤ choices of the banks,that is,on ⁤the spread that choose to‍ apply to the ⁤different offers.”

Papucci added, “In the current uncertain‌ context, with the geopolitical tension that limits investments and consumption⁣ and represents one of the ‍largest unknowns for the economic trend in the near future, the banking institutions prefer to continue ‍to⁣ encourage the fixed rate, certainly less risky choice.Provide precisely ⁤when the variable will⁣ exceed the fixed is therefore ​elaborate: the commercial policies​ of the United States‍ impose caution and the estimates of further rates by the ECB⁤ are in question.He must turn on a mortgage at this moment, the fixed rate remains the best solution since it is abundantly under 3%, that is, on historically more than acceptable⁣ levels.”

Market Trends and ⁤Consumer Preferences

Data from the Mutuionline.it Observatory reveals that fixed-rate mortgages ⁤continue to dominate consumer preferences, accounting for 99.6% of total requests ‍in the first quarter of the year. There⁣ has also been an increase in requests for ⁢mortgage subrogation – a process that allows borrowers to transfer their existing ⁤mortgage to another bank to take advantage of better terms – rising from 35.8% of the mix in​ the last quarter ‌of 2024 to 37.6% in‍ the first three months of the new year.Purchases of first homes represent⁢ over half (53.4%) of total mortgage requests.

The average loan term has reached its highest level⁢ since 2021, averaging⁣ 24​ years and 8 months between January and March.The average loan ⁣amount requested (144,519 euros) and the average value of the properties (230,618‌ euros) have remained stable compared to the end ⁢of the previous year.