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Mounting payments with variable rate mortgages

Byeditor

Apr 3, 2024

In January 2022, 26% of active mortgage loans were at a variable rate, and the rate hike by the ECB had a significant impact on the average installment of these loans. According to an analysis conducted by CRIF, the average installment for variable rate mortgages increased by +36% compared to the lows of mid-2022, with a peak of +49% for mortgages disbursed in the last 5 years. Despite borrowers making 24 installments between January 2022 and December 2023, the overall level of debt for those with variable rate mortgages in the last 5 years increased by +25%.

Despite the increase in interest rates, there has not been a significant increase in the insolvency rate for those with adjustable rate mortgages. However, the analysis of the financial tension index by CRIF shows a worsening financial situation for these borrowers, with a shift towards higher levels of financial stress. Simone Capecchi, Executive Director of CRIF, notes that the growth in interest rates has had a significant impact on variable rate borrowers, but relief may come with a possible rate cut in June 2024.

In the current macroeconomic and geopolitical context of uncertainty, it is essential for borrowers to remain vigilant in facing potential challenges. It is important to monitor and adapt to changes in the financial landscape to ensure stability and manage financial stress effectively. As the situation evolves, staying informed and proactive will be key to navigating the challenges ahead.

By editor

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