Shocking mortgage rates: and now families can’t pay

An endless increase. According to the data announced by the Bank of Italy today, Tuesday, December 12, the interest rates (Global Effective Annual Interest Rate, APR) on loans extended to families to purchase houses during the month, including additional expenses, were 4.72 percent in October. It was at 4.65% in September.

A sad record that has already brought many families into crisis: “This is a record. In the middle of the crisis, you need to find a higher APR equal to 4.91 (4.9077) by January 2009. Let’s hope the ECB achieves this. On reference interest rates there is no need for further increases, and in fact, as some analysts predict, there are conditions for a rate cut in 2024. Compared to October 2022, when the APR was equal to 3.23, the increase is as follows: “1 percent,” said Massimiliano Dona, president of the National Consumers Association. “There is a difference of 2.93 points, an increase of 2.6 times (+163.7%) compared to October 2021, when it was 49 points, 1.79,” he says. The association underlines that the increase in installments for those using variable interest mortgages can even exceed 2500 euros per year. drawing.

There are 200 thousand Italian families who cannot pay their installments

As highlighted in an analysis by Facile.it, this is a dynamic that is already putting many families in crisis. The survey revealed that approximately 200 thousand Italian families using variable-rate housing loans were unable to pay one or more installments last year precisely because of the increase in interest rates. The data disclosed in a note should be read in light of the increases affecting variable mortgage loans. Considering an average loan, installments have increased by up to 65% since January 2022, creating a total burden of over 3,100 euros per family.

In addition, according to the research, almost one in two of those who use variable interest housing loans stated that they may experience serious problems in payments if the installments remain at these levels for a long time. As a matter of fact, more than 90 thousand families will not be able to pay their installments. While 21% of respondents with variable rate mortgages said they had renegotiated terms with their bank, just under 7% opted for successor.

There are also those who decide to partially pay off the mortgage loan to ease the installment burden (6.4%) and those who extend the duration of the loan instead (4%). But not everyone managed to find a solution; 27.9% of variable loan borrowers say they have tried to renegotiate terms with their bank but have not been successful, while almost 1 in 4 (24.3%) have tried to subrogate the mortgage but have not been successful.

Good news and fears for the economy

But there is some good news in the analysis. The press release states that if analysts expect the trend to reverse in the second half of 2024, there is evidence that the new trend may occur sooner than expected in light of positive data on inflation. So much so that, according to Euribor Futures updated on December 4, the index is expected to fall in March 2024, falling from its current level of 3.95 percent to 3.68 percent and closing the year at 2.68 percent in December 2024. When this happens, the average mortgage installment taken into account would rise from the current 750 euros to 731 euros in March 2024, then reach 660 euros in December 2024.

But the good news ends there. Because according to the Bank of Italy’s report, not only mortgages but also other types of financing are increasing. The interest rates for new loans given to non-financial companies were 5.46 percent (5.35 in the previous month), the interest rates for those up to 1 million euros were 5.95 percent, and the interest rates for new loans exceeding this threshold were 5.17 percent. percentage. Interest rates on all outstanding deposits were 0.92 percent (0.86 in the previous month). The only sign of a slight reverse trend: The APR on new consumer loan originations is 10.46 percent (up from 10.52 in the previous month).

Signals that affect the economy and have direct repercussions. Therefore, all eyes are on the next decisions of the ECB, which has been increasing the cost of money for months in order to stop rising inflation. It is also a “bitter medicine” that has contraindications and risks slowing down the entire economy in the long run.

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Source: Today IT

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