In an article published in its 'Boletim Económico', several economists at the institution explain that in the first quarter of 2022 there was an increase in interest rates on housing loans of 63 basis points, which represents the largest half-year increase ever recorded.

They add that this rise will have effects both on house prices and on real estate investment. According to a linear projection prepared by ECB technicians, an increase of one percentage point in mortgage rates causes a 5% drop in house prices after two years, as well as an 8% drop in real estate investment.

But if a non-linear projection is considered, to account for greater price sensitivity due to the low interest rate environment, the impact of this one percentage point increase doubles. Based on this house prices could fall by 9% over a two-year period, while investment would fall by 15%.