MNI BRIEF: Mortgage Lag To Dent Eurozone Consumption Till 2030

The average rate on eurozone mortgages is expected to increase further due to lagged effects from the European Central Bank’s past hiking cycle, despite its recent interest rates cuts, producing dent on consumption that could last at least until 2030, the ECB said in a blog on Wednesday.

The blog used household-level data from the ECB’s Consumer Expectations Survey to show that payments are expected to rise in the coming years despite recent easing and that consumption could be hurt through the so-called cash flow channel via mortgages.

“The uneven distribution of mortgage types will shape the path of interest payments across income groups at least until 2030,” it said adding that 46% of mortgagor households have reduced their usual spending in the last 12 months. (See MNI SOURCES: Risks Tilt To Downside As ECB Mulls Path Below 2%)