“Mortgage rates have undoubtedly reached a first low”

In a few months, this rate was reduced by 0.75 basis points, going from a record level of 4% to 3.25%. The ECB thereby aims to stimulate the resumption of economic growth in the euro zone where it has been showing serious signs of running out of steam for several months, particularly in Germany, which entered recession in 2023 and which will experience a second year of economic decline in 2024. .

The ECB’s decision to once again lower its key rates was facilitated by the latest data relating to inflation in the euro zone: inflation continued to slow down in September, falling to 1.7% over one year, according to a figure revised Thursday by Eurostat, for the first time in more than three years below the ECB’s 2% objective. “Have we twisted the neck of inflation? No! Are we doing it? Yes!”affirmed the President of the ECB, Christine Lagarde, at the end of her monetary policy meeting.

No commitment to the future

And for the future? The ECB has made absolutely no commitment on the possible continuation of monetary easing, and in particular on what will be decided at its next meeting in December. “On this level, the ‘hawks’ of the ECB, who accepted a rate cut now when they perhaps hoped to wait until December, have undoubtedly obtained satisfactioncomments Eric Dor, director of economic studies at the IESEG School of Management in Lille. La BCE does not commit to the future because the ongoing process of disinflation owes a lot to the decline in energy prices – by -6% over one year. But this disinflation is still fragile and limited: the annual growth in prices of services remains high (4%), driven by wages in this sector, the increase of which reaches 4.7% over one year. And it would be enough for new large-scale geopolitical unrest to occur to cause a new shock on the prices of energy and those of industrial goods..

The fall in mortgage rates is underway: “We are moving towards loans at 2.5% per year”

Caution therefore remains in order for the future, according to the Belgian economist. Who therefore considers that the current movement of reduction in mortgage loan rates will undoubtedly stop, for the moment – today, mortgage rates are between 2.5% and 3% depending on the solidity of the file, against almost 4% not so long ago. “The ECB’s new rate cut was almost written in the stars, we could also feel it on the 10-year government bond front (Olo, in Belgium) at around 2.8%. We therefore have, undoubtedly, already reached a first floor for mortgage rates. Of course, this downward movement could resume and intensify if the ECB launched a new wave of reduction of its key rates, to go towards 2.5%, or even 2. % But we’re not there yet.”underlines Eric Dor.