From Hormuz to the Badgers

Inflation estimates go up, the sting also hits mortgages

The 3-month Euribor rose from 2.01% at the end of February to 2.18%, while the 20-year Irs rose from 3% to 3.34%

by Vito Lops

26 May 2026

2' min read

Translated by AI

Versione italiana

2' min read

Translated by AI

Versione italiana

The US attack on Iran and the consequent closure of the Strait of Hormuz are already having a tangible effect not only on global financial markets but also on households' pockets.

Discounting higher inflation expectations, in the US the average 30-year mortgage rate once again crossed the psychological threshold of 7%, a level that historically tends to dampen the housing market.

The movement is not only affecting America. In Europe, too, the strain on bonds is being transmitted directly to the cost of mortgages through the rise in Eurirs, the parameters used to determine fixed rates, and Euribor, which reflect the ECB's expectations on short-term rates.

Both these parameters are rearing their heads again.

The rise of the Eurirs and Euribor

More in detail, the 3-month Euribor rose from 2.01% at the end of February to 2.18%, while the 20-year IRS rose from 3% to 3.34%. This means that those who are paying a variable-rate mortgage will find themselves from next month onwards a 15-20 euro higher instalment (for a 150,000 euro 30-year mortgage), in a trend that could continue if the ECB really does catch up with the market movement.

In fact, bond markets are already doing the central bank's dirty work, tightening financial conditions well before any official ECB moves, and they are discounting between two and three rate hikes in the Eurozone in the coming quarters to cope with the inflation rebound triggered by the Middle East conflict.

The forward curves on the Euribor currently indicate a further rise of 0.50%-0.60% in the coming months, with the three-month rate expected to be between 2.7% and 2.8% by the end of the year. A scenario that is likely to weigh especially heavily on variable-rate borrowers already exposed to rising instalments.The picture is different for those who have to take out a new mortgage today.

"At the moment, Italian banks have chosen not to immediately pass on the high rates to new customers, instead launching major promotional campaigns to support demand," notes Rossini, CEO of MutuiSupermarket.it.

The action on spreads

In fact, the best offers on new variable-rate mortgages only went from 2.47 per cent to 2.49 per cent, while on fixed-rate mortgages there was even a slight improvement in offers, from 3.33 per cent to 3.17 per cent'.

Many lending institutions at this stage have decided to reduce the spread, i.e. the gross margin applied on the loan which is one of the two components of the final rate of a mortgage, thus avoiding a rapid increase in costs. If they had not done so, new fixed-rate mortgages of EUR 150,000 would already see instalments on average about EUR 30 more expensive.

A situation that may, however, prove to be temporary

Once the discount season is over, new products in the coming months will adapt to the rising market rates. How to behave? Paradoxically, precisely in this phase of high geopolitical tension,the fixed rate could return as a form of protection.

"Our Artificial intelligence ChatMutuo AI, analysing the 3-month Euribor futures curve, predicts that in the case of a new 150,000 euro 30-year mortgage, the total interest expenditure over the next five years will be lower by choosing the fixed rate than the variable rate," Rossini concludes, "with possible savings estimated at between 2,500 and 4,000 euro.

Vito Lopssocial media editor e redattore finanza
- @vitolops
Lingue parlate: Inglese e Francese
Argomenti: Finanza, macroeconomia e risparmio
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