The interest rate1 on new home loans2 for eurozone households rose by an unprecedented 177 basis points (bps) year-on-year in January 2023. It stood at 3.1% this past January compared with 1.3% in September 2021, its lowest level ever.
The effects on new housing loans are already clearly noticeable. The cumulative three-month figure for these fell by 29.2% between January 2022 and January 2023. This year-on-year decline is much more pronounced than the maximum decline recorded in 2009 (-23.6%). It is also slightly more pronounced than the maximum declines in 2012 (-28.3%) and 2018 (-27.2%). The record year-on-year increases in interest rates, recorded in previous months, were much more measured (+46 bps in 2008, +51 bps in 2011 and only +8 bps in 2017).
Although the time lag between the change in interest rates and the opposite change in the flow of new home loans for households is tending to shorten, the effects of the rise in interest rates are still being felt with some delay. The decline in new loans could therefore become more pronounced in the coming months, especially in view of the prospect of a continued rise in interest rates.
Eurozone: interest rate and new lending for house purchase
