How does the mortgage interest rate develop in March? You can read it in our mortgage interest expectation. This month a slight correction on the rapid interest rate rise.
Lightning fast interest rate rise
In January and February we processed a series of interest rate increases in our mortgage interest overview. Striking, because it was more than a year ago that the rates rose. But also expected, given the good economic figures and prospects of the past year.
Precisely because it took so long for the market to start moving, mortgage interest rates rose at lightning speed. The average 10-year fixed interest rate has now returned to the level of May 2016. The mortgage interest rate thus (finally) follows the capital market that has been on the rise since December.
Mortgage interest rate forecast for March 2018
We are currently seeing a slight correction on the rapid rise. The capital market interest rate, a measure of the long-term loan, has fallen slightly again. A number of price fighters in the mortgage market will use this fall to further tighten their rates.
The majority of the banks, however, will just take their place and keep the mortgage interest rate the same. We therefore expect the mortgage interest rate to remain at its current level in March.
Developments to keep an eye on
For the further development of the mortgage interest rate, we monitor two developments:
American tax on steel and aluminum
It has since become clear that US President Trump is continuing the levy on foreign steel and aluminum, either in a slightly weakened form. The measure is flexibly applied by making an exception for a number of countries.
This measure can count on a lot of criticism, especially from steel-producing countries that do not receive an exceptional position. The European Union and China, among others, have announced countermeasures. Such a trade war creates more uncertainty and falling market interest rates.
Reduction of stimulus program by the ETB
At the Eurotack Bank, after the last meeting, we get more clarity about the future interest rate policy. The central bank is currently reducing mortgage rates by keeping policy rates low and buying loans. This purchase program runs until September 2018 and longer if necessary.
The ETB’s clearness is mainly in what is not said. The passage about the possible extension of the purchase program has been deleted by the policy makers. Together with a slightly higher growth forecast for 2018, these are indications that the ETB will further reduce the stimulus program. This will reduce the downward pressure on mortgage interest.