How are mortgages and rates going. Fabi report

1 November 20222 years ago babelfish

In Italy rates on mortgages over 5%. Comparison with the euro area: record cost of money, double interest compared to France. Facts, numbers, trends and comparisons: what emerges from a research by Fabi, the banking federation led by Secretary General Lando Maria Sileoni

Interest on mortgage loans had already exceeded 4% with the cost of money at 1.25% and, with the new rise to 2% just decided by the European Central Bank, it is possible to imagine that the 5% threshold is breached. This is what can be deduced from an analysis by Fabi.

"Less than two months after the first move by the ECB, and in a state of widespread economic vulnerability, the speed with which the Eurotower record rate plan is being implemented therefore begins to generate a climate of mistrust, with strong social and financial implications for families and businesses ".

Then Fabi points out: "From the rates for new loans, which could exceed the 5% ceiling already in the coming months, to the increase in the spread that is incumbent on loans already granted at variable rates, the new financial scenario that is looming for families and Italian companies, it is getting darker ”.

The request made to the government by the secretary general of Fabi, Lando Maria Sileoni, is to strengthen the guarantee fund to help young people buy a house.

HERE'S THE SUMMARY OF FABI'S RESEARCH BELOW

Less credit and increasingly higher costs. In the first seven months of the current year, bank loans to households and businesses grew on average by 0.4%, at a much lower rate than the average recorded in the last five years and equal to 1.2% .

For mortgage loans, the slowdown in growth was even more evident because, while the pace of expansion since 2018 has been, on average, 4.6%, in the course of 2022 the multiple factors of uncertainty have changed the general confidence of all borrowers.

Less than two months after the first move by the ECB, and in a state of widespread economic vulnerability, the rapidity with which the Eurotower's record rate plan is being implemented therefore begins to generate a climate of mistrust, with strong social and financial implications for households and businesses.

THE USE OF BANK CREDIT

If, in fact, the traditional caution of Italians in resorting to bank credit has given way in recent years to a greater interest in borrowing, with the complicity of favorable rates and tax breaks, the data on end-of-summer loans represent a sign of discontinuity and of concern because they are suffering the first effects of the rise in European rates and, above all, fears for those that still have to be realized.

THE NEW DISPENSES

From the rates for new loans, which could exceed the 5% ceiling already in the coming months, to the increase in the spread that is incumbent on loans already granted at variable rates, the new financial scenario that is looming for Italian families and businesses is getting darker. If the macroeconomic environment were not so difficult and an era of favorable monetary policy had not by now ended, the future scenario would not be so worrying. Instead, the persistence of the ECB in raising rates, albeit to calm the phenomenon of inflation, and the tightening of conditions on mortgages – greater in Italy than in other European countries – runs the risk of putting a strain on sustainability. financial debt of households because the future interest rate environment is not to be rewritten.

THE RISE OF RATES

The financial news of 2008 shows that, in the historical period in which the rise in rates was higher than ever and preceded the accommodative policy of the ECB for the next 15 years, rates reached dizzying thresholds. The map of credit conditions in the Eurozone could thus give some indication – and not forecast – for the future, anticipating the financial alarm for all those citizens for whom the risks of usury and poverty could replace those of over-indebtedness.

THE EUROPEAN COMPARISON

The analysis also focuses on the European comparison: for loans dedicated to the purchase of a house, Italian families are required to have an average interest rate of 2.62% for a maturity of up to 5 years, against an average level of 1, 58% of French households and 2.27% for Spanish ones: in practice, in Italy the interests are almost double compared to France and in any case higher than in Spain.

ECB EFFECT

The persistence of the ECB in raising rates, albeit to calm the phenomenon of inflation, and the tightening of the conditions on mortgages – greater in Italy than in other European countries – runs the risk of putting a strain on the financial sustainability of the household debt: the subprime mortgage crisis could reignite in Europe.

THE COMMENT OF SILEONI (FABI)

«The ECB, to contain inflation close to 12%, has decided to raise the cost of money up to 2%, but it is not certain that it will reach the target. The Eurotower raises rates and the banks adapt, they will make money together with their shareholders. As a result of the ECB's decision, interest rates on mortgages could exceed 5%. The government is about to intervene on the bills, but the positive intervention of the government runs the risk of being partially canceled by the increase in rates on mortgages and loans. On the one hand, in short, the government will try to reduce the inconvenience of the Italians, but on the other hand, the rates on loans and mortgages will increase. Then there is a problem for young people: tax breaks must be extended by eliminating all types of taxes and strengthening the Guarantee Fund for young people's mortgages, thanks to which the State acts as a guarantee for the banks. Furthermore, the government, which should help young people to buy a house, and the Bank of Italy could supervise the banks, even in a free market situation like ours, so that excessive competition between banks is not triggered for those who manage to wade. more than the rise in mortgage and loan rates. In a moment of severe crisis like this, banks must play their social role to the fullest by supporting families and businesses »declares the general secretary of Fabi, Lando Maria Sileoni.

THE FULL ANALYSIS OF THE FABI STUDY OFFICE

Less than two months after the first move by the European Central Bank, and in a state of widespread economic vulnerability, the speed with which the Eurotower's record rate plan is being implemented begins to generate a climate of mistrust, with strong implications social and financial for families and businesses. If, in fact, the traditional caution of Italians in resorting to bank credit has given way in recent years to a greater interest in borrowing, with the complicity of favorable rates and tax breaks, the data on end-of-summer loans represent a sign of discontinuity and of concern because they are suffering the first effects of the rise in European rates and, above all, fears for those that still have to be realized. From the rates for new loans, which could exceed the 5% ceiling already in the coming months, to the increase in the spread that is incumbent on loans already granted at variable rates, the new financial scenario that is looming for Italian families and businesses is getting darker. In August, the first signs of a crisis that is beginning to bend households and slow down lending to businesses The data on loans at the end of the summer tell a two-sided truth: while for businesses, still strong in the government measures launched in times that are not certain better, continues the growth trend of new loans, the specter of the higher cost of money is beginning to appear for families, while the worst has yet to happen in a world where inflation flies. From 2018 to July 2022, household credit increased by as much as 46.5 billion, an increase of 7.4% which took the stock from 626.2 billion to 672.8 billion. The greatest accelerations were achieved in the first home and consumer loans sectors, while a decline – albeit slight – was concentrated in the “other loans” sector. Over the last five years, mortgage loans rose by 38.8 billion (+ 10.3%) from 379.1 billion to 417.9 billion, consumer credit by 10.4 billion (+10.1 %) from 102.5 billion to 112.9 billion while other loans fell by 2.7 billion (-1.9%) from 144.7 billion to 141.9 billion. As regards businesses, in the same period there was an overall reduction in loans of 8.7 billion (+ 1.3%), going from 678.5 billion to 669.7 billion: this decrease mainly concerned the loan component short-term for 64.8 billion (-29.9%), a reduction which unfortunately largely offset the growth recorded in loans over 5 years, which increased by 63.9 billion (-21.4%). As regards medium-term loans (up to 5 years), the reduction was more contained but led to a contraction of € 7.8 billion (-4.8%). In the first seven months of the current year, bank loans to households and businesses grew on average by 0.4%, at a much lower rate than the average recorded in the last five years and equal to 1.2% . For mortgage loans, the slowdown in growth was even more evident because, while the pace of expansion since 2018 has been, on average, 4.6%, in the course of 2022 the multiple factors of uncertainty have changed the general confidence of all borrowers.

Starting from August 2022, in contrast to the past, the first signs of a setback are even beginning to appear for all Italians who still see the safe haven in bricks and for those companies, whose cost of credit could become a ballast. Against an acceleration of 2.2% recorded until July, at the end of August, loans to businesses increased by only 0.7% compared to the previous month, while those of households contracted by 0.1% . A slowdown that for Italian families was worth more than 600 million euros less in credit. In particular, as regards businesses, from July to August there was an overall increase in loans of a scant 4.5 billion, from 673.9 billion to 678.4 billion: this acceleration was favored only by the increase in loans of medium term for 3.9 billion (+ 2.5%), accompanied by a very modest growth recorded not only in terms of loans over 5 years, increased by 474 million, but also in terms of very short-term loans (up to 1 year), increased by only 66 million. For Italian households, the low growth in other loans is not even able to compensate for the decline in consumer credit and mortgage loans. Lending to households in August alone decreased overall by 633 million, bringing the total stock from 677.9 billion in July to 677.3 billion. In detail, mortgage loans decreased by as much as 298 million (-0.1%) from 422.3 billion to 422.1 billion, while consumer credit suffered a slowdown by 409 million (-0.4%) from 114 , 3 billion to 113.8 billion. The only sector not to suffer a setback is that of other loans, which increased by a scant 70 million (+ 0.1%) from 141.3 million to 141.4 million.

The contraction in mortgage loans and consumer credit for households is not only a reversal of the trend, but is an alarm that could turn into a financial scourge for families in the coming months. And so, while energy prices are on the rise and inflation defies all predictions, hitting almost 12%, home ownership could increasingly represent an achievement for Italians. The August data released by the ECB photograph Italy as a country with interest rates higher than the average level of those recorded in the euro area. This is true, almost, for all categories of loans, starting with mortgage loans, passing through consumer credit and finally arriving at other loans granted to households. The analysis of the rates by maturity of the loan shows that the cost of credit for Italian families is higher on average by 18 basis points for a mortgage loan with a maturity of between 1 and 5 years, up to 32 basis points for one. same loan over 10 years. For all other loan categories, the spread is much wider and the spread is even higher than 140 basis points. If we analyze the class of consumer loans, only loans with a maturity of less than 12 months have, in Italy, a cost comparable to that of other countries and even lower than the European average but, in consideration of the average duration of loans for this purpose, the Italian comparison does not hold up. For maturities between one and five years, as well as for longer durations, the offer of credit for the purchase of cars, appliances, smartphones and travel is less profitable than in France and Germany, and the differential compared to the average figure in Europe it moves between 138 and 143 basis points or around 1.4% more. In detail, for loans dedicated to the purchase of a house, Italian families are required an average interest rate of 2.62% for a maturity of up to 5 years, against an average level of 1.58% for French families and 2.27% for the Spanish ones. In this sector and also for maturities over 10 years, Italy is second only to Germany, which boasts the record in all time bands, respectively of 2.78% for loans up to 5 years, of 2.74 % for those up to 10 years and 3.04% for those with maturity over 10 years. The situation does not improve if we compare the consumer credit data, where Italy excels – together with Spain – over all other European countries, for the cost of loans, with a minimum interest rate of 4.32% for loans. one year, up to 6.81% for a consumer loan with a maturity of between one and five years. For an Italian citizen who decides to take out a loan for the purchase of assets other than the property, the price to be paid for the higher deadlines is even higher. Compared to a rate of 3.32% requested from the audience of French citizens, the average Italian pays more than double and even the comparison with Spain and Germany does not at all show particularly favorable conditions of access to credit. Among these two nations, the lowest rate level is that recorded in Germany, with 6.88%, while Spain boasts a 7.39%, which is also lower than Italy's 7.67%. Finally, in the sector of other mortgages, the interest rate on loans paid in Italy for new operations reaches the maximum level of 3.62% for longer maturities against 1.79% in France and 3.30% in Germany. . Spain wins the record with 4.69%, while Italian rates, for all maturity bands, are still higher than the European averages.

The subprime mortgage crisis could rekindle in Europe: the financial news of 2008, in fact, teaches that, in the historical period in which the rise in rates was higher than ever and preceded the accommodative policy of the ECB for the next 15 years, rates have reached staggering levels. The map of credit conditions in the Eurozone could thus give some indication – and not forecast – for the future, anticipating the financial alarm for all those citizens for whom the risks of usury and poverty could replace those of over-indebtedness. If the macroeconomic environment were not so difficult and an era of favorable monetary policy had not by now ended, the future scenario would not be so worrying. Instead, the persistence of the ECB in raising rates, albeit to calm the phenomenon of inflation, and the tightening of conditions on mortgages – greater in Italy than in other European countries – runs the risk of putting a strain on sustainability. financial debt of households because the future interest rate environment is not to be rewritten

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-vanno-mutui-e-tassi-report-fabi/ on Tue, 01 Nov 2022 08:22:41 +0000.