Mortgages, BTPs and Bonds under scrutiny: the ECB cuts rates to 2%

After a year of monetary easing, the ECB cuts rates again and may now take a summer break. Inflation in the eurozone fell below 2% in May, aided by the economic slowdown, especially in Germany. The new rates fall to 2% for deposits, 2.15% for main refinancing and 2.40% for marginal refinancing, with effects expected on mortgages and the bond market.

Mortgages, ECB cuts rates to 2%

ECB rates are now at 2%, half of what they were a year ago , as analysts expected. Good news for those who have a variable mortgage or intend to take out a loan: the average installment drops by about 17 euros per month, from 618 to 601 euros, after having exceeded 750 euros at the end of 2023. The decision came at the end of the ECB's governing council . At a press conference, President Christine Lagarde said that, with this cut, the institution is approaching the end of a cycle initiated in response to complex shocks such as the pandemic, the war in Ukraine and the energy crisis, adding that we have entered a new phase, with different conditions and actors.

For now, no further cuts are expected: the ECB will evaluate new interventions only after the summer , also based on the impact of US duties on the European economy. Euribor futures signal a possible halt to the decline by the end of the year, with rates stabilizing around 597 euros.

Meanwhile, the first variable rate offers are arriving that are more advantageous than fixed ones (APR from 2.53%), but the advantage is still limited and tied to specific durations. The fixed rate remains the most popular, also due to the lower spreads.

The recent rate cut by the ECB has significantly affected BTPs and other bonds, involving both institutional investors and private savers. The yield on Italy’s 10-year BTP fell to 3.62% at an auction in April 2025, hitting its lowest since February, driven by expectations of further rate cuts. However, the ECB’s “quantitative tightening” (QT) policy, which involves not reinvesting maturing bonds, could increase the supply of bonds on the market, putting pressure on spreads and leading to possible yield increases.

ECB cuts rates from June 11: lighter variable mortgages and stable growth despite global risks

After four interventions during 2024, the ECB has announced a new rate cut starting from 11 June 2025. The new thresholds will be:

• 2.00% for deposits at the central bank,
• 2.15% for major refinancings,
• 2.40% for marginal refinancing.

This reduction entails a concrete benefit, albeit moderate, for those who have signed up for a variable rate mortgage. According to Codacons, families could obtain savings estimated as follows:

• for mortgages between 100,000 and 200,000 euros over 20 years: from 13 to 27 euros per month, equal to a maximum of 324 euros per year;
• for thirty-year loans: installment reduction of up to 30 euros per month (360 euros per year);
• for a typical loan of 125 thousand euros over 25 years: reduction of approximately 17 euros per month, or 204 euros per year.

Meanwhile, the average rates applied by banks are decreasing: according to Bankitalia, in March 2025 they stood at 3.54%, a sharp decline compared to the peak of 4.92% reached in November 2023.

The ECB estimates slow but steady growth for the Eurozone : +0.9% in 2025, +1.1% in 2026 and +1.3% in 2027. After a good start to the year, concerns about US tariffs remain. The economy will be supported by targeted public spending, stable employment, slightly rising incomes and more accessible credit.