Will mortgage interest rates go up and what will that mean? It all depends on one institution, say analysts – PRAVDA.sk

We are currently facing accelerating inflation, which is felt throughout virtually the euro area. This puts pressure on the European Central Bank to raise interest rates and thus slow inflation.

However, the leaders of the European Central Bank decided at the December meeting to leave the key rate unchanged and have not yet announced its further increase. At least this year, analysts do not expect interest rates to rise.

The interest rates on the loan market are based on the setting of the main interest rate of the European Central Bank (ECB) in the euro area. It is currently at zero and has not yet announced an increase. “The current pandemic and the commodity crisis are counteracting interest rate rises in the eurozone, which is slowing down economic growth. An increase in interest rates would slow down this economic recovery even more, “Jana Glasová, an analyst at 365th Bank, told SITA.

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According to Glasová, the development of interest rates on mortgage and consumer loans will largely depend on the steps taken by the ECB. “We assume that under the weight of high inflation, the ECB will also have to raise rates. This could happen in the second quarter of next year. At the same time, however, we expect this increase to be only modest and cautious; in the first step, the rate could increase from the current zero to 0.25%. Due to this, loan rates should also increase only at a modest pace, “Glasová noted.

Even according to financial analyst OVB Allfinanz Slovensko Marián Búlik, it is certain that the growth of interest rates in the coming years must come, even though it will probably be a slow and gradual rise in interest rates. According to Eva Šablová, Director of Loans at FinGO.sk, the signals so far are that the year 2022 would not have to bring any fundamental adjustments to the base interest rate, so interest rate corrections in Slovakia will depend more on the business policy of each bank.

“Lending at such low interest rates is currently not very profitable for banks, on the other hand, the amount of money does not pay to keep them at no or negative credit interest rates. Therefore, they will still provide motivated loans and, under the influence of competitive pressure, interest rates can still be held at around 1%, “she told SITA Šablová. All this provided that the ECB does not intervene and make a correction through the change in the base rate.