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With yet another rise in the cost of money, further increases in interest rates on all types of financing will be inevitable. This was underlined by the FABI (Autonomous Italian Banking Federation), recalling that there are 6.8 million indebted households in Italy, equal to approximately 25% of the total: of these, 3 and a half million have a mortgage to purchase a house.
THIS IS HOW MUCH MORE IT WILL COST TO BUY A CAR
During 2022, interest rates on loans have increased significantly and new increases are inevitable with the cost of borrowing further increased to 3.75 percent. Buying a car in installments, for example a 25,000-euro model, could cost, in the case of a ten-year loan at a rate of 12.7%, more than 8,200 euros more than in 2021.
WHAT CHANGES FOR MORTGAGES
As far as new mortgages are concerned, – explains the autonomous Italian banking federation – the installments of fixed-rate ones are destined to double, while for variable-rate ones, the monthly repayment should rise by 50-60%. In more detail, for a 200,000 euro fixed-rate mortgage over 25 years (the average rate applied by banks could be significantly higher than 5%), the monthly installment will be 1,218 euro; for a loan of 100,000 euros, also for 25 years, with an interest rate of 5.1%, the monthly payment will instead be 597 euros.
As for old mortgages, on the other hand, there is no difference for those with fixed rates, while the installments of those with variable rates have undergone increases of up to 65%. At the end of February 2023, the total value of mortgages for the purchase of homes amounted to 426 billion euro, up by 50 billion compared to the end of 2017 (+13.5%).
MORTGAGES IN ITALY
Out of a 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 who are also indebted with other forms of financing, such as consumer credit and personal loans.
BANKS SLOW DOWN WITH LOANS
Between consumer credit and personal loans, banks have disbursed 253 billion euros of loans to citizens, in line with the values at the end of 2017, but slowing down compared to the trend of recent months, a sign of the negative impact of the rate increase of interest.
THE WORDS OF SILEONI (FABI)
“The umpteenth increase in the cost of money by the European Central Bank – comments the secretary general of the FABI, Lando Maria Sileoni – represents another very heavy boulder on bank loans and on the entire Italian economy”.
“There are two risks – he continues –: a very strong slowdown in the real estate and construction markets and a very evident reduction in business investments, which will slow down employment. Like a film already seen, the decision of the American Federal Reserve was followed by the copycat decision of the European Central Bank”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/rialzo-tassi-bce-conseguenze-italia/ on Mon, 08 May 2023 05:43:16 +0000.