“After the fall in the second quarter, Italian GDP is also estimated to be weak in the third and expectations for the fourth are no better: the decline in industry and construction is accompanied by a setback in services. The ECB rate increases do not stop , credit is falling together with liquidity, the cost of energy is rising again. Consumption and investments are affected, while foreign demand is lacking.” Confindustria writes this in the flash economic situation, painting a gloomy picture.
4.6 billion increase in mortgages from the tightening of rates
The rapid rise in interest rates that began last year is continuing in 2023. The effect hoped for by the ECB is a cooling of internal demand, i.e. investments and consumption (which is already observed), in an attempt to reduce inflation. For families, this occurs by increasing the cost of interest on loans, even those already in existence, in particular mortgages for the purchase of a home; this is also being associated with a brake on the disbursement of new loans. Confindustria underlines this in the flash economic situation. The tightening of rates has a considerable impact, especially on families who have home mortgages.
The increase in rates is +2.84 percentage points until July 2023, the stock of mortgages is 425 billion euros, of which only those with variable rates should be considered, estimated at 38% of the total (162 billion). This results in an increase in annual interest equal to +4.6 billion, in aggregate. Which weighs immediately, in 2023, given that the installments on variable mortgages are updated month by month. The greater burden connected to the increase in interest is quite concentrated, because it only concerns families who bought a house with a variable mortgage, a share which is estimated at 4.9% of Italian families (1.2 million, out of 25, 6 total). That is, the extra 4.6 billion in interest in 2023 is paid only by these families, for which the higher rates correspond to +3,683 euros in interest in the year (+307 per month, a substantial increase in the installment for a family with an average residual mortgage of around 130 thousand euros). These are not necessarily poor families: in Italy renting is more common among families with lower incomes, while ownership and therefore mortgages are more common among those with higher incomes.
Read the full article on ANSA.it
2023-09-30 07:01:00
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