The European Central Bank raised its three key interest rates by 25 basis points, pushing the deposit rate to 2.50% and the main refinancing rate to 2.65%, according to an official announcement reported by ANSA. The unanimous decision by the governing council aims to curb stubborn inflation that remains above the 3% threshold, targeting a return to the 2% medium-term goal despite ongoing economic growth across the eurozone.
How the ECB Rate Hike Affects Variable Mortgage Rates
Borrowers with variable-rate mortgages will see their monthly payments increase, though the shift is not instantaneous. According to an analysis by Facile.it, a standard variable-rate mortgage of 126.000 euro over 25 years with an initial TAN of 2,70% will see monthly payments rise by approximately 17 euro, moving from 614 euro to 631 euro. Codacons estimates that for larger loans between 125mila and 150.000 euro, monthly installments will climb by 15 to 25 euro. These adjustments depend entirely on individual contract reset dates and the movement of the Euribor index, which sits at 2,67% and is projected by market futures to reach higher levels by mid-2027.
Fixed-Rate Mortgages and New Borrower Trends
Fixed-rate mortgages remain unaffected by immediate ECB adjustments because they track the IRS benchmark rather than central bank rates directly. Data from Mutuionline.it indicates that fixed rates remain stable at 3,30%, maintaining a narrow gap with variable rates that could shrink to just 16 basis points if subsequent hikes materialize. Despite ongoing rate adjustments, fixed-rate loans continue to represent the overwhelming choice for Italian borrowers, accounting for over 90% of new agreements.
Broader Economic Impact on Business Loans and Growth
The tighter monetary policy extends beyond residential mortgages into corporate lending and macroeconomic growth projections. Confartigianato reported that outstanding loans to small businesses dropped by -4,3% year-over-year in March, worsening from a -4,0% decline in December. At the same time, the ECB revised its eurozone growth forecasts to +0,9% for 2026 and 1,4% for 2027, while business investments in machinery decelerated sharply, dropping -2,3% in the second quarter compared to the previous three-month period.
Worth a look