Rise of fixed-rate loans makes ECB’s job harder

The shift away from variable towards fixed-rate mortgages in many European countries over the past 15 years means that it will take longer than in the past for interest rate hikes by the ECB to feed through to household interest expenditure. This suggests that households’ interest costs won’t skyrocket and cause a steep fall in spending, but will instead grind higher, leading to a milder but longer period of weak growth.