Brussels, Belgium: Financial experts predict that mortgage rates in Belgium are likely to remain steady in the upcoming year, defying expectations of a rise as inflation throughout the eurozone declines.
This insight comes from Immotheker Finotheker, a real estate consultancy, which reports that the current average rate for a 20-year fixed-rate mortgage, representing 80% of the home’s purchase value, stands at 3.77%, reflecting a modest increase of 0.25 percentage points from the previous year.
Immotheker Finotheker CEO John Romain, speaking to L’Echo, emphasized that further mortgage rate hikes are not anticipated in the coming year.
Romain stated, “It seems that interest rates are stabilizing at this high level,” echoing sentiments shared by Johan Van Gompel, Senior Economist at KBC, who also indicated that significant declines in mortgage rates are unlikely in the foreseeable future.
Van Gompel remarked, “For mortgage rates, considering all commercial considerations, a further increase in interest rates is not to be expected. But the hope of a sharp fall in these interest rates seems equally improbable.”
The experts suggested that unforeseen circumstances, such as an escalation of the conflict in Ukraine or tensions in the Israel-Hamas relationship, could potentially impact energy prices, triggering further rate hikes by the European Central Bank (ECB) and subsequently influencing mortgage rates.
Romain pointed out, “No one can predict how the conflicts in Ukraine and Israel will develop. The slightest escalation could trigger a new energy crisis and, therefore, a spike in prices.
“Moreover, inflation expectations influence long-term interest rates upwards. Therefore, the evolution of the geopolitical situation could affect these rates.”
The ECB has taken decisive action over the past 18 months, increasing rates ten times to address soaring prices, resulting in its benchmark deposit facility rate reaching a record high of 4%.
Remarkably, the surge in mortgage rates has not led to a decline in house prices. However, a recent study by Statbel, Belgium’s official statistics office, revealed that house price increases have slowed considerably over the past year.
The study disclosed that prices for detached houses rose by 1.4% in the third quarter of this year compared to the same period last year, a notable decline from the 4.3% increase observed from 2021 to 2022.
Similarly, the rate of price increase for apartments also decreased, dropping from 5.9% to 2.1% over the same period.
This study coincided with the ECB’s announcement of maintaining key interest rates unchanged and revising its eurozone inflation forecasts downward for this and the following year.
John Romain emphasized that, as inflation gradually declines, mortgage rates are expected to follow suit in the coming years.
“Interest rates will thus gradually return to their pre-COVID crisis levels,” Romain concluded, offering a perspective on the potential trajectory of mortgage rates as economic conditions evolve.
The Belgian real estate market will be closely monitored for any shifts in response to these financial dynamics.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members
