Euro Zone Is Still Held Back by Rising Mortgage Rates, ECB Finds

Household consumption in the euro area will remain restrained for some time as past interest-rate hikes continue to feed through to mortgages, according to research by the European Central Bank.

The impact will be felt even after the ECB lowered its deposit rate to 2% from 4% starting in June 2024, economists at the Frankfurt-based institution wrote in a paper published Wednesday. That’s because fixed-rate loans taken out when inflation was low are still expiring. Borrowing costs for those that are refinanced will jump to current levels.