The threats have materialized. The European Central Bank (ECB) has already announced an interest rate hike of 25 basis points in July and another 50 basis points in September. And it may not stop there. However, Christine Lagarde has promised a “gradual” and “sustained” trajectory, which will put an end to the cycle of negative interest rates that we have been witnessing for several years.
These increases will automatically trickle down to those with credit, taking on more weight for those who took out a loan to buy a home. But what will be the impact? In an analysis carried out by ComparaJá.pt for oi, for a loan of 186 thousand euros, granted over 33 years, consumers will pay more than 40 euros per month, which translates into an additional charge of almost 500 euros per year. After all, if in June of last year the deposit was around 537.12 euros, it will increase to 588.77 euros in July of this year (see tables opposite).
In the same analysis, for housing of lesser value (125 thousand euros), but for the same period of time, the increase is approximately 30 euros per month, or an increase of 360 euros per year. The accounts are simple: last June, the monthly payment was set at 363.85 euros, but it will increase to 392.07 euros next July.
However, the increase in the monthly payment will be greater if the loan amount is higher. According to the same study, for a house worth 275 thousand euros, payable in 33 years, the monthly increase will be around 60 euros. In annual terms, the difference will be 732 euros. This means that, if last June the buyer paid a monthly installment of 794.12 euros, it will quickly rise to 855.70 euros in a few days.
“Average interest rates have gone up, and the numbers have gone up significantly since the start of the year. It is important to note that the interest will increase by 0.5% in just 5 months. In addition, average interest rates once again exceeded 1%, which had not happened since July 2020,” says the same study carried out for i. Also on Wednesday, the INE revealed that the interest rate on mortgages had risen to 0.826%, 2.1 basis points (bp) higher in May. This is the highest interest rate since April last year.
Despite these increases, the document draws attention to the fact that the demand for home loans is not decreasing, noting that in March the maximum amount of euros made available by banking institutions in the last five years was reached. : 1,691 million euros. “Given that we live in a very troubled moment and very little certainty with regard to the financial market, the care to be given to our finances must be redoubled and it is therefore advisable to adopt certain strategies in terms of housing loans” , says João Melo, from ComparaJá.pt.
And faced with this scenario, he specifies that there are two ways of best preparing for the future of the financial system: “The first thing to do is to simulate the credit that was contracted at the time of the acquisition of the well since the conditions contracted at the time can (and will be) different from what the market offers nowadays. Secondly, it can also be positive to proceed with a mortgage transfer. Although it is a somewhat unknown solution, the truth is that renegotiating a loan with the current bank or transferring it to another ends up, in most cases, saving hundreds of euros”, says -he refers to our newspaper.
The search will download? Henrique Tomé, an analyst at XTB, had already admitted that in Portugal the problem in the real estate market was mainly linked to the fact that there is little supply for such a demand for properties. But he acknowledges that “in the short term, rising interest rates could actually depress demand in the real estate market, which could result in a slight correction in prices”, adding that “concerns around a possible economic slowdown can also fuel this scenario of a correction in real estate prices”.
However, he recalls that interest rates have been at their lowest for several years, noting that these increases will be gradual and should not have a major impact on families. “Compared to what is happening in the United States, the ECB is taking a much more cautious stance, but in fact there is such a possibility. We have seen several sectors slow down, except the real estate sector which remains solid”.
More pessimistic is Nuno Garcia, managing director of GesConsult, for whom the rise in interest rates leads to an increase in monthly expenses related to housing, which includes the monthly payment of the loan. “For families, this is something that can be difficult to overcome, as paying electricity, water and gas bills was often already a challenge, with the increase in the monthly loan payment, the situation worsened. worsen”.
In view of this scenario, the manager advises buyers to analyze the situation well and understand if they will be able to guarantee the payment of their expenses, “so that we do not go through what happened in 2011, when the credits have been stopped for payment”. chess “. Nuno Garcia still believes the risks will be less than what we saw at the time of the Troika. And to explain the reason: “Today, we see more rules in the approval of housing loans and people are better informed about the whole process. I don’t think we will experience the same situation. However, you must be very careful, no doubt. We come out of one crisis and almost instantly enter another. A capacity for adaptation and reflection is necessary, so as not to relive the same thing”.