How does the mortgage interest rate develop in 2019? This is our forecast based on developments in the market. Will the mortgage interest rate rise in 2019?
How does the mortgage interest rate develop in 2019?
The mortgage interest rate is still historically low. This is partly due to the interest rate policy of the European Central Bank (ECB). The development of the economy and ‘mood’ on the financial markets also have an impact on interest rate developments. We discuss these factors and provide our forecast for mortgage interest in 2019.
Why is the mortgage interest rate low?
Due to the Euro crisis and the subsequent low economic growth, the ECB has taken far-reaching measures to stimulate the economy. The central bank has lowered the policy interest rates and bought out billions of euros in loans every month.
This ensures that there is a lot of ‘cheap money’ available to lend through mortgages, but also to borrow corporate loans and consumer money. Saving becomes unattractive due to a low interest rate. This should boost spending in the euro zone.
Incentive measures phased out
The economy in the Eurozone has since recovered to such an extent that the European Central Bank has started to phase out the stimulus measures. The purchase program has been stopped since 2019. This less broad monetary policy of the ECB gives room for an interest rate rise.
The buy-back program has a particular impact on the capital market interest rate, which in turn is an important indicator of the long-term mortgage interest, such as 20-year fixed interest.
Uncertainties in the market depress interest rates
The next step, increasing policy interest rates, is currently not under discussion. The ECB indicates that it will maintain the low interest rate until at least after the summer of 2019. The central bank sees the following risks:
- The economy is growing, but not as fast. In China, for example, there has been a slowdown in growth.
- The outcome of the Brexit negotiations. Will there be a hard Brexit or not?
- Emerging protectionism, such as the trade war between the US and China.
The above uncertainties also ensure caution on the financial markets. Investors trade in their riskier investments for bonds from economically stable countries such as Germany and the Netherlands. The supply of money on the capital market therefore remains large.
Mortgage interest rate development 2019 (our expectation)
Only when the uncertainties in the market fade into the background, there will be more room for an interest rate rise. Until that time, the mortgage interest rate remains at the current low level. So you still have a chance to record the low mortgage interest.
At the beginning of 2019, however, we see uncertainty increasing. The capital market interest rate is at the lowest level since 2 years. This offers room for lenders to lower their mortgage rates. And is
Due to increased competition in the mortgage market, margins have become smaller. Moving with the market is necessary for those who want to offer the lowest mortgage rates. Lenders adjust their rates quickly to changing market conditions.