Mortgages, the rise in interest rates is a prick in the pocket of Italians

Mortgages, the rise in interest rates is a prick in the pocket of Italians

In July, interest rates on loans disbursed in the month to households for house purchase, including ancillary costs (Annual Effective Global Rate, APR) stood at 2.45 percent (2.37 in June), while new consumer credit disbursements reached 8.48 percent (8.34 in the previous month). The data were released by the Bank of Italy, which adds that interest rates on new loans to non-financial companies were equal to 1.31 percent (1.44 in the previous month), those for amounts up to 1 million euros were equal to to 2.01 percent, while rates on new loans that exceeded this threshold stood at 1.01 percent. Interest rates on all outstanding deposits rose to 0.32 percent (0.31 in the previous month).

These figures led to a note from Codacons: “The interest rate data released today by Bankitalia confirms the impact being hit on Italian borrowing, with the Taeg rising 0.71% in just one year, thus increasing the household spending on loans and mortgages”. But the worst, for the association, is yet to come. Yesterday’s decision by the ECB to raise rates by 0.75% will, in fact, have direct effects on the pockets of families who have taken out a variable rate mortgage, analyzes Codacons.

Assuming a mortgage of 150 thousand euros for 25 years – one of the most requested types in Italy – the monthly payment will increase from the current 590 euros to 643 euros, with an increase of +53 euros per month, +636 euros per year. In a loan of 200 thousand euros, again for 25 years, the monthly payment will go from 787 euros to 858 euros, +71 euros per month, +852 euros per year. Worse for those who took out heavier and longer-term loans: in a mortgage of 250 thousand euros with 30 years, the monthly payment rises from 847 euros to 937 euros, with an addition of +90 euros monthly and an equal disbursement of 1,080 euros per year, calculates Codacons.

Source: IL Tempo