Italian homebuyers and homeowners are currently on high alert due to growing concerns about increases in mortgage interest rates. However, the challenges in the mortgage industry don’t stop there. Starting in September, further changes are expected to occur which could significantly affect property lending in Italy.
Outlook from September
The mortgage landscape is currently under increasing pressure due to expectations of rising interest rates. This could translate into higher monthly payments, putting a strain on Italian household budgets
Italians are faced with a difficult prospect. In addition to rising costs in the food, insurance, school and fuel sectors, there is another enemy on the horizon: mortgage increases. Starting in September, both variable-rate and fixed-rate mortgages could undergo significant increases.
The economic situation, already unstable due to the increase in interest rates, threatens to bring many families to their knees. The increase in mortgage payments could weigh on the domestic budget, while the purchasing power of salaries continues to decrease.
Experts warn that variable rates will move higher in the coming months. The 3-month Euribor, a crucial indicator for variable rates, currently at 3.77%, seems destined to align itself with the ECB rate in the next 2-3 months. And the increase in the ECB rate to 4.25% in July only adds to the tension.
But not only floating rates are in the spotlight. Even fixed-rate mortgages, initially stable, are showing signs of an increase. The Irs index, which influences fixed-rate mortgage rates, increased by about 10 basis points. If this trend continues, we could expect increases in fixed rate mortgages from September onwards.
The shadow of the tax on extra profits
The government’s decision to impose a tax on bank excess profits has created further uncertainty. This move is expected to limit access to credit. According to Bank of Italy, in the second quarter the number of operators who struggled to obtain a mortgage increased by 0.8%, reaching 30.9%. This level is the highest since 2014.
Banks aren’t the only ones in turmoil. There is a fear that, due to the tax on extra profits, banks may reduce the availability of credit. This could further hinder households and businesses needing finance for their projects.
Advice
At a time when financial education is more important than ever, it’s crucial for home buyers and homeowners to be prepared to meet these challenges. Here are some tips that might help:
Check your financial situation: it is essential to understand how much you can afford in terms of monthly payments, especially in a context of potential rate hikes. Consider fixed rates: If possible, it may be time to consider switching to a fixed rate mortgage, to protect against any future fluctuations. Consult Financial Experts: Talking to a financial advisor could help you plan more accurately and make informed decisions. Against a backdrop of rising loan rates, both for homes and businesses, and declining deposits, Italy’s economic prospects are becoming increasingly uncertain. Staying informed, planning wisely and seeking financial advice are becoming vital measures in dealing with this turbulent economic climate.
2023-08-15 09:12:12
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