Trump can raise our mortgage

BarcelonaFortunately, the percentage of fixed-rate mortgages is increasing—63% of new mortgages—but if US President Donald Trump doesn't change his economic policy—which doesn't seem likely—those with variable-rate loans may be left wanting for further reductions in their payments. This also affects those planning to apply for a loan in the coming weeks.

The reason is that, with its back and forth—now I put a tariff on you, now I take it away—the final effect, in addition to the ups and downs it causes in the stock market, will be that the prices of many products will rise for consumers, including those in the US. The effect of this will be more runaway inflation, that is, the rise in the general price level and, to be clear, that of the shopping basket.

The European Central Bank (ECB) has cut interest rates six times since June of last year, coinciding with the moderation of prices; and it was expected to continue doing so. But the scenario of growing uncertainty makes it difficult to foresee further cuts. The main benchmark for variable-rate mortgages, the one-year daily Euribor, reflects fears that interest rate cuts may be coming to an end or, at least, entering a period of stagnation.

If Trump follows through on his threats, we could find ourselves in a context of rising prices. And if this indicator moves away from the ECB's target of 2%, we already know what happens: rising prices of money to curb it. This is not good for those with variable-rate mortgages or for those aspiring to sign one.

Everything will depend on the steps Trump continues to take. It has been proven in previous situations that tariffs damaged the economy and raised inflation. Perhaps Trump, given the concern of his own voters, will eventually reconsider. And thus the rest of us can continue enjoying the expected drop in the price of money.