The average mortgage rate of new issues for the purchase of homes fell to 3.61% in Maycompared to 3.67% in April and 4.42% last December. This is what emerges from the monthly report of the Italian Banking Association (Abi), which also notes a decrease in the average rate on new loans to businesses, which dropped to 5.21% from 5.30% in April 2024 and from 5.45% of December 2023. In general, the ABI reports that the overall average rate on loans, including those subscribed in previous years, remained stable at 4.81%.
Loans to families and businesses declining
Overall, the report states, loans to businesses and families are as of May 2024 decreased by 2.3% compared to a year ago, the same decline recorded in April 2024, when loans to businesses fell by 3.4% and loans to households by 1.2%. The reduction in credit volumes is linked to the slowdown in economic growth, which contributes to depressing the demand for loans. Thus the Abi in the monthly report for June.
As regards the progress of the market rates, in the first 13 days of June, the rate on six-month BOTs averaged 3.61%, down from 3.64% in May and in drop of 45 cents compared to the maximum value recorded in October 2023. According to the Abi, “in recent months there have been signs of a decrease in market rates compared to previous maximum valuesanticipating the ECB’s recent decision to lower monetary policy rates by a quarter of a point.”
The rate on new fixed-term deposits, such as certificates of deposit and time deposits, fell to 3.51% in May. In April it was at 3.59%, higher than the 3.49% recorded in the Eurozone. Compared to June 2022, the last month before the ECB rate hikes, when the rate was 0.29%, the increase was 322 basis points.
The performance of the new ones fixed rate bank bond issues increased by 221 basis points compared to June 2022, reaching 3.52% in May, against 1.31% last June. The average rate on overall deposits (certificates of deposits, savings deposits and current accounts) remained unchanged compared to April, equal to 1.04%, compared to 0.32% eleven months earlier. As regards current accounts, which the Abi specifies offer “a multitude of services” and “do not have an investment function”, the yield remained stable at 0.57%.
How much you save with the drop in rates: the Fabi report
We are therefore heading towards a series of drops in mortgage rates, with Italian families able to breathe a sigh of relief.
In recent days, the Autonomous Federation of Italian Bankers (Fabi) following the ECB’s rate cut, it collected data on the current state of expenses for purchasing a house. For example, if a family decided to ask for a 25-year real estate loan of 200 thousand euros, the overall savings would be over 54 thousand euros (-14.9%) compared to the amount spent two years ago. In a simulation, with current rates, the monthly payment for 25 years would be 1,032 euros, against 1,212 euros in 2022, with a monthly saving of 180 euros, annual savings of 2,162 euros, and a total of 54,044 euros.
