Long-term mortgage interest rates will fall this year, analysts say

Interest rates on long-term mortgages are set to fall this year, predicted advisory service De Hypotheker. The expectation is that the persistent interest rate hikes by institutions such as the European Central Bank (ECB) will weaken inflation and economic growth, so that interest rates will likely fall again by the end of the year.

Fixed mortgage interest rates have not risen significantly since the beginning of this year, although variable interest rates have. The costs for loans with a fixed interest rate for 10 and 30 years have remained virtually the same in the first five months of 2023. Last year was marked by rapid increases in mortgage interest rates.

The variable interest rate and also the fixed interest rate for a period of 5 years are now higher than those for long-term loans. Fixing the interest rate of a loan for a shorter period of time is normally cheaper because it provides less security. Now things have turned around, as interest rates are expected to fall again soon.

De Hypotheker said it expects the ECB to continue with its rate hikes for some time, but also predicted that they will peak in July. Interest rates for shorter-term loans will rise at the same rate, but will fall for the longer term, according to the mortgage advisor.

“In combination with the falling house prices, this increases the possibilities for home buyers,” said commercial director Menno Luiten.