In Italy there are 6.8 million indebted families, around 25% of the total, of which 3.5 million have a mortgage to buy a house. This is highlighted by the mortgage and consumer credit dossier of Fabi, the Italian Autonomous Federation of Banks.
After the ECB meeting on Thursday, February 2, which approved a new increase of half a basis point, raising the basic rate to 3%, the federation presents a series of data and forecasts that indicate the evolution of credit to families in our country and how interest rates may evolve in the coming months.
If, as announced, the cost of money reaches 3.5% at the next March meeting, “new interest rate increases on all types of financing will be inevitable”, declares Fabi. Throughout 2022, interest rates on loans have increased significantly and further increases are inevitable, with the cost of borrowing rising by as much as 3%. As far as new mortgages are concerned, the fixed installments are set to double, while the monthly “repayment” variables are expected to rise by 31%. In detail, for a 25-year fixed-rate mortgage of 200,000 euros (the average rate applied by banks may be 3.9%), the monthly installment is 1,056 euros; for a loan of 100,000 euros, also for 25 years, at a rate of 3.7%, the monthly installment is now 517 euros.
As for old mortgages, there is no difference for those with fixed rates, while the installments of those with variable rates have seen increases of up to 43%. The total value of mortgages for house purchase amounted, at the end of November, to 426 billion euros, 50 billion more than at the end of 2017 (+13.5%). Between consumer credit and personal credit, banks made €256 billion in loans available to citizens. A value that denotes a growth of around 2 billion compared to a few years ago, precisely 2017 (+1%).
Fabi also prepared estimates on the share of cars and household appliances. At the end of 2021, the average interest rate was 8.1%, which, in view of the decision taken on February 2nd, could reach 11.3%: buying a vehicle worth €25,000, fully in installments and with financing from 10 years, the total cost would increase from 37,426 euros to 42,986 euros, with an overall difference of 5,560 euros (+15%). On the other hand, to purchase a household appliance for common use, for example a washing machine, for 750 euros, fully in installments and with a 5-year loan, the total cost goes from 942 euros to 1,022 euros, with a global difference of 81 euros (+8.6%).
However, the president of the ECB, Christine Lagarde, raised the hypothesis of a probable change in strategy that would lead to not touching rates anymore. “Better late than never, by the way, because unfortunately it is Italian families and companies that pay the consequences”, comments Lando Maria Sileoni, secretary general of Fabi.
Source: IL Tempo
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
