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In recent months, banks have begun a progressive reduction in the rates charged to families with the average fixed rate falling to 3.69% last March. A reduction that was less pronounced on variable rate mortgages with the average stable above 4 percent. This was reported by an Analysis & Research report by Fabi, the autonomous Italian banking federation. Mortgage rates fell to an average of 3.69%, compared to average levels above 5% in 2023: a reduction which entails, in the case of a 25-year real estate loan of 200 thousand euros, an overall saving of 54 thousand euros (-14.9 percent). In terms of mortgages disbursed last year, the installments of those with a fixed rate had effectively doubled, while for those with a variable rate the monthly “repayment” rose by 60-70% or even more. As for old mortgages, however, no difference for those with a fixed rate, while the installments of those with a variable rate have increased by up to 78 percent. Consumer credit rates fell to an average of 8.93%, after peaks above 14%.
There are 6.8 million families in debt
There are 6.8 million indebted families in Italy, therefore about a quarter of the total. Of these, 3 and a half million have a mortgage to purchase a house. Over the course of 2022 and 2023, interest rates on loans increased with the cost of borrowing gradually rising to 4.5 percent. For some months, the Fabi report indicates, “the banks, in anticipation of a return to a less restrictive monetary policy by the Eurotower, have been anticipating the expected reduction in rates”.
In Italy mortgages for 423 billion
The overall value of mortgages for the purchase of homes amounted, at the end of March 2024, to 423.4 billion euros, up by approximately 33 billion compared to the end of 2020 (+9%), but down by 3 billion compared to end of 2022 (-1%). Of the total of 423.4 billion disbursed, approximately one third, i.e. 144 billion, is at a variable rate and the remaining 279 billion is at a fixed rate. Starting from July 2022, Fabi notes, new fixed rate mortgages have gone from an average interest of around 1.8% even up to over 6% with monthly installments which, therefore, based on the offers of the banks, had also more than doubled. In recent months, banks have begun a progressive reduction in the rates charged to families with the average fixed rate falling to 3.69% last March. The reduction was less pronounced on variable rate mortgages with the average stable above 4%. During 2023, new variable rate mortgages had reached even above 6% from 0.6% at the end of 2021, today the average is equal to 3.67%: it means that for a 150,000 euro loan with a duration of For 20 years the monthly payment is 1,180 euros, 515 euros more (+77.4%) compared to what would have been obtained two years ago or 665 euros.
Sileoni: on rates we are in a transition phase
«After the moment of the large increases and, awaiting the reduction in rates in the coming months, the banks have understood that the time has come to put a stop to the difficulties of families and businesses who still find themselves paying the price of a monetary policy restrictive”, underlines the general secretary of Fabi, Lando Maria Sileoni, commenting on the Fabi study on the rates applied by banks to customers. For many, Sileoni notes, «the unsustainability of installments has already lasted too long and, in this transition phase, anticipating the ECB’s moves reduces the damage for customers and can only help improve the quality of credit in the sector. While waiting for effective and lasting solutions from those who govern in Frankfurt, the priority is to give a strong signal to those who find themselves in greater economic difficulty and to young people and with the reduction in rates, the function also resurfaces – in some way – social sector”. Sileoni underlines that «we are, therefore, in the transition phase: while waiting for the first cut in the cost of money, which the ECB should decide in about ten days, the banks are therefore improving the conditions on loans and mortgages to families». The average interest rate, observes Sileoni, “has already fallen significantly compared to the end of 2024 and this entails important advantages for all those people who want to buy a house”. In the next 18-24 months, underlines Sileoni, «the ECB will probably drastically reduce the cost of money, hoping that inflation remains at today’s low levels, to reach around 2%: that is the substantially optimal level to which we must get used to ».
Consumer credit and personal loans for 244 billion
The report then points out that out of the total of 25.7 million Italian families, those who have a mortgage are around 3.5 million, out of a total of 6.8 million citizens also indebted with other forms of financing, such as credit to consumption and personal loans. Between consumer credit and personal loans, banks have disbursed 244 billion euros in loans to citizens, a slight decrease compared to the values at the end of 2020. There is a progressive slowdown compared to the trend of recent months, a sign of the negative impact of interest rate increase recorded starting from July 2022.
