_European banks prepare to cut interest rates in 2024

The European Central Bank (ECB) opted to hold its main loan facility at 4% for the third consecutive time on Thursday 25 January, despite a 0.5% increase in December’s inflation rate.

The rate of inflation rose to 2.9% in December 2023, up from 2.4% in November of the same year, which is enough to keep central bank rates stable for a while longer.

Market trends signal future interest rate cuts

John Busby, Head of Sales at Traverse International Finance, says, “Markets are arguably less concerned with this increase in inflation as the overall trend for rates is heading on a downward trajectory. We only saw a small increase in 10-year fixed rates, up by 0.20% from December 2023.”

The ECB is expected to lower its interest rate six times over 2024, with the first cut anticipated in March or April. Capital Economics forecasts the ECB will reduce its main loan facility to 2.75% by the end of 2024.

John highlighted, “The good news is that retail banks are already making reductions to mortgage products on offer. A headline rate currently on the market is for a 25-year mortgage loan fixed at 4.9%.”

Falling mortgage rates are leading to an uptick in property transactions and will likely contribute to improved market performance in the first 6 months of 2024.

About Traverse International Finance

Traverse International Finance, our chosen partner for mortgages in Europe, specialise in providing advice for anyone looking to purchase or remortgage a property in France, Italy, Spain, Portugal, Monaco and Switzerland.

By getting to know their clients’ needs and aspirations beyond the transaction itself, the Traverse team can unlock lending opportunities tailored to their clients, even in complex or unique situations.

If you are thinking about your property plans in Europe and would like an initial conversation about your requirements, book a consultation with one of their specialist advisers.