Mortgage interest expectation November 2019

How does the mortgage interest rate develop in November? Read our interest rate forecast. This month we expect the mortgage interest rate to fall further, but less strongly.

Mortgage interest rates fell further

Mortgage interest rates fell further

Mortgage interest rates have fallen further in the past month. In addition, the lowest mortgage interest rate for 20 years most definitely fell by 0.18%.

The fall in interest rates is the result of new stimulus measures from the EurCen Bank (EB). The policy interest rate was already lowered in September. Another part of the measures will be implemented this month. The EB will restart the buy-back program from 1 November.

These measures must support the economy in the Eurozone. The EB considers this necessary now that the global economy is growing less rapidly, partly due to uncertainty surrounding the Brexit and the trade war between the US and China.

In the financial markets, intervention by the EurCen Bank has been taken into account for some time. The interest on the capital market (supply and demand for long loans) went into a dive this summer and even turned negative. As can be seen in the graph below of the 10-year Dutch government loan.

The capital market interest rate is a measure of, in particular, the long-term mortgage interest rate. One after the other lender lowered the mortgage interest rate to a provisionally lowest level in recent months.

At the same time, the margin on mortgage interest also increased. This means that the rates can be reduced even further. For various reasons, such as compensating for the loss on savings, banks are currently increasing margins slightly.

Mortgage interest rate forecast for November

Mortgage interest rate forecast for November

As can also be seen in the graph above, the capital market interest rate has been rising again for two months. However, this is still lower than the previous lowest point in 2016. We therefore expect that the mortgage interest rate will remain low for the time being. The number of interest rate cuts is expected to decrease.

In the coming months it should become clear that this change in market interest rates will continue. In the long term this could lead to a stabilization and then an increase in the mortgage interest rate.

Lagarde succeeds Draghi at the EB

Lagarde succeeds Draghi at the EB

This month it was announced that Christine Lagarde will succeed Mario Draghi as president of the EurCen Bank on 1 November. The recent easing of monetary policy was therefore the last EB measure under the chairmanship of Draghi. This has somewhat paved the way for his successor. The central bank continues to depress interest rates.

This has not reduced the challenge for Lagarde. Despite policy rates of 0% and lower and billions being pumped into the economy every month, inflation remains below the desired point. At the same time, the resources for the EB to raise the price level towards 2% are as good as used up.

Continuing on the same footing is therefore an option. For the long-term interest rate policy it is interesting to follow where Lagarde places ‘new accents’. Because, just like her predecessor, Lagardes words will also be weighed on a gold plate in the coming years.

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