ECB Cuts Interest Rates Again: What It Means for Mortgages in Italy

The European Central Bank (ECB) has continued its monetary easing policy. In its second meeting of the year, the ECB decided to reduce interest rates by 25 basis points, effective from March 12, 2025. The refinancing rate will drop to 2.50%, the marginal lending facility to 2.65%, and the deposit facility to 2.90%.

Why Did the ECB Decide to Cut Rates?
According to the ECB, the disinflation process is well underway. Expert projections suggest that overall inflation will average:
2.3% in 2025
1.9% in 2026
2.0% in 2027
The upward revision for 2025 is due to rising energy prices.
Core inflation (excluding energy and food) is expected to be:
2.2% in 2025
2.0% in 2026
1.9% in 2027

How Will Banks Respond?
Banks are expected to offer more competitive deals to attract new clients. Competition among lenders will likely increase, especially in the first months of the year.


How Much Further Will Rates Drop in 2025?

Forecasts for 2025 suggest further reductions:

2.5% by April
2% by June
In the most optimistic scenario, rates could fall to 1.5% by the end of 2025.


Impact on the Real Estate Market
Lower interest rates mean lower monthly payments and better access to credit, which could stimulate demand for real estate.


Conclusion
The ECB rate cut is good news for variable-rate mortgage holders and prospective home buyers.