• Wed. Apr 17th, 2024

Variable Rate Mortgage Borrowers Feel the Heat as ECB Interest Rates Surge in 2022

BySamantha Jones

Apr 3, 2024
Variable rate mortgages with rising payments

In January 2022, variable rate mortgages made up 26% of active loans. The increase in interest rates by the ECB had a significant impact on borrowers, particularly those with variable rate mortgages.

According to an analysis conducted by CRIF, the average installment of these loans increased by +36% compared to the lows of mid-2022, with a peak of +49% for mortgages disbursed in the last 5 years. This increase in financial exposure for borrowers was despite making only 24 installments between January 2022 and December 2023.

The rise in interest rates led to a +25% increase in overall debt levels for those with variable rate mortgages over the past five years. While there was no significant increase in insolvency rates among borrowers with adjustable rate mortgages, there was an increase in financial tension as shown by CRIF’s financial tension index.

Simone Capecchi, Executive Director of CRIF, commented on the impact of interest rate dynamics on variable rate borrowers over the past two years. While there has not been a significant increase in insolvency rates, there has been a notable rise in financial stress among these borrowers. The potential for a rate cut in June 2024 could provide relief for these borrowers and help stabilize their financial situations.

As we face current macroeconomic and geopolitical uncertainties, it is important to remain vigilant and prepared to face any challenges that may arise in the future.

By Samantha Jones

As a dedicated content writer at newszxcv.com, I bring a passion for storytelling and a keen eye for detail to every piece I create. With a background in journalism and a love for crafting engaging narratives, I strive to deliver informative and captivating content that resonates with our readers. Whether I'm covering breaking news or delving into in-depth features, my goal is to inform, entertain, and inspire through the power of words. Join me on this journey as we explore the ever-evolving world of news together.

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