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It is a complicated period for those who have to access mortgages, between rate cuts and unknowns about the future.
For over a year i interest rates are constantly decreasing, influenced by the cuts applied by the ECB and by the monetary policies adopted in response to global economic dynamics. The Abi Report of October 2024, in fact, highlights a reduction in average rates for mortgages and loans, offering new opportunities to families and businesses.
The Abi (Italian Banking Association) monthly report highlighted that in October 2024 the average rate it stood at 3.28%, recording a decrease compared to 3.31% in September 2024 and a significant decrease compared to 4.42% in December 2023.
This decrease of more than one percentage point in less than a year reflects the combined effect of the progressive reduction in the ECB’s reference rates and the expectations of further interventions on rates in the coming months. This dynamic is making more accessible the purchase of properties – also thanks to the extension of the benefits for mortgages under 36 – fueling positive prospects for the relaunch of the real estate sector.
According to the ABI, market data suggests that the ECB may announce further reductions rates as early as next month, more precisely on 12 December 2024. A decision of this type would strengthen the downward trend in the cost of credit, offering greater certainty to those intending to invest or purchase a home. However, the full recovery of credit demand will depend on the general evolution of the economic context.
Families and businesses are smiling
The micro perspective makes you smile families e businesses: borrowing money to buy a house or to finance a business costs much less today than a year ago and banks are even already anticipating the ECB’s next interest rate cuts.
The macro perspective gives families and businesses pause: the real economy is so slow that there is little to invest and much to wait, so much so that the demand for loans is declining despite the cost of money being cheaper than twelve months ago. Non-academic paradoxes of a phase in which he is difficult to be certain.
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Watch out for the long term
In the long term However, the situation could change, especially if promises of an ultra-expansionary fiscal policy and a protectionist trade policy with the introduction of new duties are kept.
“Such measures should fuel the inflationary pressures“, and then rates could rise again.
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Welcome to World Today News. We have with us today two esteemed guests, Maria Di Bartolo, a mortgage expert, and Giorgio Guerrasio, an economist, to discuss the current status of mortgage rates in Italy and their impact on the housing market. Maria, let’s start with you. As a mortgage expert, how has the decrease in interest rates impacted the demand for housing loans over the past year?
Maria Di Bartolo: Thank you for having me. The decrease in interest rates has certainly had a positive impact on the demand for housing loans. More and more families and individuals are able to afford the cost of buying a home or investing in property due to the lower borrowing costs. The Abi report showcased a significant decrease of more than one percentage point since the beginning of 2023, which is a testament to the ECB’s monetary policies’ effectiveness. The extension of benefits for mortgages under 36 has also fueled the demand for housing loans. However, there is still concern about the overall economic context and how it may affect the demand for loans in the long run.
Giorgio Guerrasio: That’s an interesting point, Maria. From an economic perspective, Giorgio, what are your thoughts on the current mortgage rate trends in Italy? How do you see them affecting the broader economy?
Giorgio Guerrasio: Thank you for having me. The current mortgage rate trends in Italy are certainly a mixed bag. On one hand, they offer more accessible housing loans to families and businesses, which can have a positive impact on the economy by increasing investment in the real estate sector. However, the slow growth rate of the economy means that there is little to invest in, leading to lower demand for loans overall. This creates a bit of a paradox where it’s difficult to be certain about the future, especially in the long term. The influx of foreign investment post-pandemic has been a factor, but without significant policy changes, we may see a plateau in the housing market’s growth.
Maria Di Bartolo: That’s a valid concern, Giorgio. As a mortgage expert, how do you foresee the market evolving with the prospect of further ECB rate cuts in December
