Mortgages: the impact of interest rates – an average increase of up to 540 euros a year on new contracts
The Credipass simulation: an extra 13,000 euros over 25 years for those taking out a mortgage in October
Key points
Almost 13,500 euros more over 25 years, equivalent to 540 euros a year. This is the estimated additional cost for someone taking out a €130,000 mortgage in October compared to someone who took one out in February, based on a combination that reflects the Italian market: 85 per cent at a fixed rate and 15 per cent at a variable rate. This figure is based on a simulation carried out by Credipass exclusively for *Il Sole 24 Ore* over 300 instalments.
The estimate
The comparison relates to two mortgages with the same amount, term and French-style repayment schedule. The timing of the mortgage take-out differs, and therefore so do the interest rates: the first is based on February’s terms, the second on those estimated for October. The mix of new mortgage terms indicated by Credipass is applied to both: this is not a contractual formula offered on the market, but a weighted average of the choices made by Italian mortgage borrowers.
The total cost is €187,765 for an average mortgage taken out in February and €196,865 for one taken out in October: a difference of €9,100 over the 300 instalments. However, even the first mortgage contains a 15 per cent variable component that is affected by rises in the Euribor and therefore already incorporates part of the increase in interest rates. To isolate the full effect of the rise, Credipass also considers a scenario with unchanged interest rates: if the February terms were maintained for 25 years, the total cost would have been around €183,376, i.e. €13,489 less than the October mortgage, equivalent to €540 per year.
Underlying this change is the rise in both the IRS – the benchmark for fixed-rate mortgages – and the Euribor, which is used for variable-rate mortgages. Added to this is the ECB’s decision on 10 September to raise its three official interest rates by 25 basis points, for the second time in 2026. From 16 September, the deposit rate rose to 2.50 per cent, the main refinancing rate to 2.65 per cent and the marginal lending rate to 2.90 per cent. Frankfurt cited inflationary pressures generated by the conflict in the Middle East as the reason for the tightening, without indicating its next moves. “All medium-term scenarios,” says Roberto Anedda, head of financial market analysis at Credipass, “forecast rising interest rates. Tensions in the energy market remain high, and this will lead to higher costs.” Anedda also points out that the Fed has just raised rates despite pressure from Trump, and the markets are anticipating at least two further rate rises by the ECB between the end of this year and the start of next year.
The components
To understand how the average increase is calculated, Credipass breaks down the two components. For fixed-rate mortgages, the best average rate has risen from 2.982 per cent in February to 3.49 per cent in October. The monthly instalment rises from 615 to around 650 euros and the total repayment from 184,577 to 195,034 euros: an extra 10,457 euros, averaging 418 per year. In the case of a loan with a fixed rate throughout its term, the additional cost can be calculated from the moment the loan is taken out, as the instalment remains unchanged.
