The European Central Bank’s intention to raise core interest rates as of July will put an end to cheap cash for businesses and households. This has a significant impact on most of the loans where interest rates are associated with Euribor rates.
It is estimated that 90% of all loans the bank has in its portfolio will be affected, amounting to around 90 billion euros. Most of the loans already sold to the fund (a total of about 70 billion euros) will also be affected. A variable rate based on the 3-month Euribor rate.
The total amount of automatically changing loans is expected to exceed € 150 billion, and businesses and households will have to pay about € 1 billion from the ECB’s rate hike by 2023. This forecast relates to the entire set of private debt. : Membership companies and individuals meet their obligations because the majority are in debt to the banks currently in service and those in the funding portfolio are somehow negotiated or considered bad. There is increasing pressure on debtors who find it difficult.
The forecast is that the first ECB rate hike in July will be 0.25% and will rise as well in the previous quarter of this year. Therefore, by the end of 2022, interest rates are expected to rise by 50 basis points to over 1% in 2023 and 1.5% in 2024. This means increased costs, based on existing inflation forecasts. Level – Following the ascending course for the next 3-5 years, it will continue for a while. This will bring the baseline rate from 1.50% to 1.80% by 2025.
Such a level needs that the era of cheap money that households and businesses have enjoyed will really and really end, as they have been their allies in fulfilling their obligations over the past few years. will do.
To make matters worse, the interest rate on deposits will not rise before the ECB’s rate hike exceeds 50 basis points, initially only affecting loans. Experts explain that this is because deposit rates do not have an auto-adjustment mechanism like loans.
https://www.ekathimerini.com/economy/1184350/debtors-to-pay-an-extra-1-billion-euros/ Debtor paying an additional € 1 billion