From floating to fixed rates
The banking market is witnessing a trend of conversion of mortgage loans that were contracted with a floating interest rate into a long-term fixed interest rate (mainly five years), as the persistence of inflation at high levels continues to make borrowers nervous about the evolution of interest rates after the end of the freeze that banks have implemented.
Worries persist as all estimates converge that the European Central Bank will continue to raise interest rates, but also that rates will remain high for longer than originally predicted. According to the same estimates, during Thursday’s board meeting, the ECB will proceed with another interest rate increase, while the possibility of further action in July remains.
These forecasts, combined with the maintenance of inflation in the eurozone at 7% based on the April data, continue to fuel concerns about the maintenance of high interest rates not only for 2023, but also for next year.
Therefore, despite the fact that Greek banks are implementing a program to freeze interest rates on existing mortgage loans at the levels of this past March until March 2024, the concern is pushing a significant portion of borrowers to convert contracts from floating to fixed.
