The European Central Bank on Thursday plans to take its deposit rate up by 50 basis points to 2.00% despite the euro zone economy almost certainly being in recession.
And the question now is how long this attack on the family and business budget will last and whether the new increase in the cost of money will be 0.50% or 0.75%.
Philenews reports that, from July till today, European interest rates have increased by two points burdening all loans at a floating rate.
The total burden ranges from 120 to 150, if it is a mortgage balance of €200,000 with a floating rate and repayment in 20 years.
Before the increase in interest rates that applies today the installment was €1,175. With the increase in effect today the installment has increased by €1,292, i.e. €117 difference in one month alone.
If the interest rate increases by 0.50% on Thursday, then the installment is adjusted to €1,309, an increase of €17. And if the interest rate increases by 0.75%, the monthly installment rises by €44.
Essentially, with the interest rate increases that started in July, ones is asked to pay an average of 1.5 installments per year, if the loan has a repayment horizon of 20 years.
And this amount is big for household incomes that are not particularly high and struggle with increasing prices.
