Mortgage interest rate development in February
How does the interest rate develop in February? Read our mortgage interest expectation. This month we see market interest rates rise again. How do the banks respond?
Interest rate cuts and interest rate increases
In January we saw a mixed picture for mortgage rates. We noted 17 interest rate cuts and 20 interest rate increases. Despite these adjustments, the lowest mortgage interest rates in the market remained the same.
Market interest rates on the move again
Market interest rates started to move again at the end of January. Both the (short) money market interest rate and the (long) capital market interest rate rose at the end of January. The rise in capital market interest rates is even comparable to that in November last year. Then lenders massively raised mortgage rates.
Mortgage interest rate expectation February 2017
Until now it has remained remarkably calm with interest rate increases. Lenders are no longer frightened by a rising market interest rate and have taken into account a gradual rise in mortgage interest rates.
For February, therefore, we expect the mortgage interest rate to continue to rise slightly. You receive our interest rate updates and the monthly interest rate expectation in your mailbox.
New ‘Trump Effect’
The recent rise in capital market interest rates is largely the result of Trump taking over as the President of the United States. In the first week of his presidency, he announced investments in infrastructure and a number of tax cuts. This is expected to lead to economic growth and higher inflation.
However, Trump’s plans also cause an increasing budget deficit. This may be a reason for the American system of central banks (Fed) to accelerate the rise in the policy rate. In December, the Fed indicated that it would take 3 interest rate hikes in 2017 into account. On 1 February, the Fed announced that interest rates are currently unchanged.
Pressure on mortgage interest continues
Inflation is also rising in the Eurozone. In January, prices rose by 1.8% in the nineteen Eurozone countries. The largest increase in 4 years. However, this rise in price levels is mainly caused by more expensive oil. The European Central Bank (ECB) therefore sees no reason to change its policy for the time being.
The ECB will continue the buy-up program until the end of 2017. By the December meeting it was decided to reduce the monthly amount from 80 to 60 billion. Criticism of the broad monetary policy, in particular of the northern Eurozone countries where inflation is rising faster
This downward pressure on interest rates prevents the mortgage interest rate, but also the savings interest rate, from rising rapidly.