ECB keeps interest rates stable: what does that mean for your mortgage and buying power?
Marnix Hazelhoff
29 July 2025
Readingtime 4 minutes
On July 24, 2025, the European Central Bank (ECB) kept its policy rates unchanged. This marks the first pause following the rate cut on June 5 (by 0.25 percentage points, bringing the deposit rate to 2.00%, among others). For homebuyers, the key question is how this decision affects market rates and mortgage rates, and what that means for your monthly costs and the amount you can offer on a home.
In short
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The ECB is pausing for now; the June easing remains in effect. Further steps depend on economic data.
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Mortgage rates usually follow market rates with a delay and do not move one-to-one with ECB decisions.
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Outlook for 2025: banks expect a slight further decline in mortgage rates, provided inflation and financial markets remain stable. Count on that trend, but leave some safety margin.
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Translation to your offer: lower rates can increase your financial comfort zone, but in tight markets that room is often ‘bid away’ in higher selling prices.
What's happening in the mortgage market?
Since last year’s peak, mortgage rates have gradually decreased, though with occasional bumps. That’s because the market rates banks use as a basis started to decline earlier, driven by lower inflation expectations and earlier signals from the ECB. While the ECB’s policy rate mainly affects short-term market rates, it also indirectly influences long-term rates through market sentiment. The July 24 pause brings some calm: there’s no sudden shift, but gradual declines may continue.
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Still, banks and analysts remain cautious. The ECB has made clear that further rate cuts will only follow if inflation is clearly under control. That means mortgage lenders are hesitant to lower their rates too quickly. So, for you as a buyer, mortgage rates in new offers may still drop slightly over the course of 2025 (by a few tenths of a percentage point), but there’s no guarantee. It’s wise not to base your full buying power on that expectation, and to lock in a good rate offer early if you want certainty.
What does this mean for your monthly expenses?
If you take out a €350,000 annuity mortgage for 30 years at 4.5% interest, your monthly payment will be around €1,773. If the rate drops to 4.0%, your monthly cost falls to about €1,671, a difference of roughly €100 per month. With a €550,000 mortgage, that difference grows to around €160 per month. You can use this to increase your buying power, or you can save this in for a rainy day.
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How can you utilize this?
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If possible, lock in a mortgage rate with a validity period before you finalize your offer. This protects you against adverse market movements.
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Have your mortgage advisor calculate two scenarios: one based on the current rate, and one assuming a 0.25 percentage point drop. That way, you’ll know exactly what purchase price fits your net financial comfort zone.
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In the lead-up to your offer, monitor market interest rates to see whether the trend is moving in your favor. You can track these via the Dutch Central Bank (DNB) overviews.
This way, your bidding strategy is based on actual developments in the interest rate market—not just the headline about the ECB pause.
