2022 and 2023 were two very dark years for consumers who are or aspire to be a borrower. The economic crisis, due to various factors, has caused mortgage and loan rates to skyrocket, effectively undermining any desire for new real estate purchases and more. But 2024, given the premises, is finally marking a change of direction.
Even last May, in fact, the rates applied by banks to families for the purchase of a new home were dropped for the sixth consecutive month. A fact that gives food for thought and gives new life to the market. But how tangible is this drop in rates?
Rates are falling: the current situation
May 2024, according to the monthly report ofAbi (Italian Banking Association)is the last of well 6 months of progressive decreases of the mortgage rate on new transactions, which began in December 2023. In this sense, the current rate is stands at 3.61%, down from 3.67% in April and even from 4.42% last December. Considering that the peak reached in November 2023 of 4.50% remains, fortunately, a distant memory, the downward trend is truly significant.
This, as anticipated, concerns mortgages to individuals, that is, families looking for a financing transaction to purchase a property. The impact is different at the moment for what concerns companies and businesses. In fact, although savings are still felt, in May the rate is positioned at 5.21%, lower than the 5.30% of April but still not too far from the peak of 5.45% of December 2023.
What does all this mean? That the burden on installments is decreasing, both for fixed rate solutions and for variable rates, albeit to a lesser extent. And the outlook, according to sector projections, is more than positive for the coming months.
Is a fixed rate or a variable rate worth it today?
We have already given the answer, in part, in the previous paragraph. To date, after the May data and the various announcements of cuts by the ECB, the fixed rate remains a more stable, safe and convenient solution for new mortgages. This dynamic is due to the fact that the variable still has difficulty recording significant returns in the monthly installments, considering that in two years the increase in their share has reached peaks of 119%. Too great a risk for many families, considering that, at the current level, the convenience is not there.
As we analyzed in a previous in-depth study, in fact, Facile.it tried to estimate the drop in mortgage installments following the announcement of the cut in the cost of money by 25 basis points by the European Central Bank. In this sense, taking into account the downward trend of the last six months, the fixed rate wins the challenge of savings with the variable, with a good 20% less for new mortgages (for the same amount and duration).
It is no coincidence that, according to the estimates of Facile.it, requests for financing have registered a increase of 17% in the period January-April 2024 compared to last year, with the fixed rate on the shields.
Solutions to find the best rate
If you are considering buying a new home, with a mortgage application attached, is this really the right time to act? In these cases, the answer is subjective, since the choice to make a purchase or sale involves several factors, of which the impact of bank financing is certainly one of the most relevant.
There are, however, some aspects that give rise to hope. First of all, the punctuality of the analyzes and the success of the projections; in fact, since last January a 2024 is definitely significant for the drop in rates and, as expected, the decline is taking place, with May 2024 marking a value never so low since December 2022 (then at 3.36%).
Considering current estimates, this decline is destined to continue and intensify in the coming months – also thanks to the interventions planned by the ECB – until it reaches 2025.
This dynamic pushes consumers to at least start looking around, since the offers and opportunities are there. Facile.it, the number one online quote comparator in Italy, also comes to our aid in this situation, with the possibility for users who simulate a first home mortgage to find the right solution for their needs, with the possibility of accessing some cases to exclusive offers. The same applies to those who wish to make a subrogation, focusing on the new opportunities of the current market.
