How does the mortgage interest rate develop in June? Read our mortgage interest forecast for this month. In it more about the irons in the ECB’s fire.
Last month the European Central Bank (ECB) bought up 80 billion euros in bonds for the first time. Previously this was 60 billion. It was one of the measures in the ECB’s Interest Rate Decree of 11 March this year.
However, the market does not seem impressed by the extra billions. For example, the exchange rate hardly reacted and inflation, which the ECB is all about, even falls. However, the central bank still has an iron in the fire, in the form of a credit facility (TLTRO) to encourage banks to grant more credit.
Interest rate mortgage expected in June
The ECB will await the effect of this measure in June. We therefore expect that the central bank will not take any action on the new interest rate decision on 2 June. The mortgage interest rate will therefore remain at the current low level in June.
Effectiveness of the ECB
Meanwhile, the effectiveness of the ECB’s low-interest policy is openly questioned. However, doing nothing is not an option. This does not allow low inflation. So the question is what the next step will be for the central bank.
The ECB is likely to intensify the buy-back program again. At the end of the second quarter, the ECB will buy up corporate bonds. This is already planned. The purchase program can also be extended and extended. Possibly this summer already.
Mortgage interest rate bottom reached
Even if the ECB decides to intensify the buy-back program, the question is that this will further reduce the (long) mortgage interest.
The effect of the measure in March was limited. The capital market interest rate, an important pillar of long-term mortgage interest rates, remained virtually unchanged.
The Fed is likely to raise policy rates in the coming months. This may drive up market interest rates. Next month again.
The end of what the central bank can do to stimulate the economy seems to be in sight. This is the reason to assume that the mortgage interest rate has reached the bottom and may only fall a few tenths.
Bank interest rate promotions
Then we do not include interest rate promotions that lenders sometimes come up with. . Such stunts sharpen the competition, but are more likely to position the bank (again). The extremely low interest rate is interesting for a limited target group, but will not lead to a new round of interest rate cuts.
For the interest rate development in the long term, see our mortgage interest rate forecast for 2016.