• Sat. Apr 20th, 2024

The Rise in Interest Rates and its Impact on Variable Rate Mortgage Borrowers: A CRIF Analysis

BySamantha Nguyen

Apr 3, 2024
Variable rate mortgages with rising payments

The rise in interest rates by the ECB had a significant impact on borrowers with variable rate mortgages. According to an analysis conducted by CRIF, 26% of active mortgage loans were at a variable rate in January 2022. The average installment of these loans increased by +36% compared to the lows of mid-2022, with a peak of +49% for mortgages disbursed in the last 5 years.

Despite making 24 installments between January 2022 and December 2023, borrowers with variable rate mortgages experienced an increase in financial exposure due to the growth in interest rates. CRIF’s analysis showed that this led to a +25% increase in overall debt levels over the last 5 years.

Although there was no significant increase in insolvency rates among those with adjustable rate mortgages, there was an increase in financial tension. This was indicated by CRIF’s financial tension index, which revealed higher levels of indebtedness and a risk of failure among borrowers with variable rate mortgages.

Simone Capecchi, Executive Director of CRIF, commented on the impact of interest rate dynamics on variable rate borrowers in the last two years. While there has not been a significant increase in insolvency rates, there has been a notable rise in financial stress. The potential for a rate cut in June 2024 could provide relief for borrowers and help stabilize their financial situations.

In light of current macroeconomic and geopolitical uncertainties, it is crucial to remain vigilant and prepared to face any challenges that may arise in the future.

By Samantha Nguyen

As a content writer at newsskio.com, I weave words to craft compelling narratives that captivate readers and bring stories to life. With a keen eye for detail and a passion for storytelling, I strive to create engaging and informative content that resonates with our audience. Whether I'm delving into the latest news trends or exploring unique angles on various topics, my goal is to deliver quality content that informs, entertains, and inspires. Join me on this journey as we uncover the news stories that matter most.

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