The increase in the cost of money, and therefore mortgage payments, has not been enough to wipe out the advantage of buying a home over renting.
According to an analysis by Telemutuo, in fact, despite the increase in the cost of mortgage financing, the monthly payment of a mortgage contracted to cover 80% of the value of the house has not increased. cost of financing the purchase of a house in Milan, Rome or Naples continues to present clear advantages in economic terms compared to the corresponding average cost of renting the same property.
X-ray analysis
The simulation carried out by the Telemutuo research office took into account loans with a term of 25 and 30 years, which represent nearly 70% of the outstanding debt. mortgages Young people under 36, the segment of the population most affected by the dilemma of whether or not to buy a mortgage, are the most likely to need a mortgage. rent or buy an apartment.
In this bracket, in the cities of Milan, Rome and Naples, the cost of a monthly mortgage payment is up to 24% lower than the corresponding rent of rent intended for the same good.
“The increase in the cost of mortgages that we have witnessed in recent months has only reduced the convenience of buying a house in the major Italian cities rather than resorting to renting,” explained Angelo Spiezia, managing director by Telemutuo. “While it is true that the level of financing costs for the purchase of a property has increased compared to the historical minimum to which we have become accustomed in recent years, it should not be forgotten that we are today at a level well below the historic peaks reached at the end of the first decade of the 2000s. At the same time, the cost of financing has been accompanied by a significant increase in average rents in recent years. One factor, this one, which again played in favor of the purchase. All this, without forgetting the so-called portfolio effect, that is, the possibility of capitalizing the company’s capital. installment payments loan at a cost even lower than the expected rent for a property of the same category”.
The results
MILAN
In Milan, the type of property most in demand by buyers under 36 is the two-room apartment. If we consider an average purchase cost of 300,000 euros and an average rental value of 1,300 euros per month for the same dwelling, it follows that with a rental value of 1,300 euros per month, the two-room apartment is the most requested. mortgage covering 80% of the purchase price, the financed value is 240,000 euros. The mortgage payment at 25 years is 1,207 euros per month and at 30 years 1,071 euros per month. The analysis explains that the two options allow considerable savings in relation to the rent, of the order of -7% to -17%.
ROME
In Rome, the same apartment costs a little less than in Milan and amounts to 280,000 euros. The same property, rented, will have a rent of around 1,200 euros per month. Again, the mortgage projections, given the family’s monthly budget, show that buying is easier. Applying for a mortgage loan covering 80% of the purchase price, and therefore having to anticipate 56 thousand euros, it follows that with a mortgage covering 80% of the purchase price, the value financed is 224 thousand euros and the mortgage payment at 25 years is 1.127 euros per month and at 30 years 999 euros per month. The analysis shows that the two options make it possible to achieve a considerable saving compared to the rent, of the order of -6% to -16%.
NAPLES
By identifying a hypothetical property with the same characteristics in the city of Naples, the hypothetical purchase cost drops to 180 thousand euros. The same property, on the other hand, has an average monthly rent of around 840 euros. Considering a mortgage equal to 80% of the purchase price, i.e. 144 thousand euros in 25 years, we would have a payment of 725 euros, which drops to 642 in the hypothesis of a duration of 30 years, with a saving between 14% and 24% compared to the rent.
Accumulation effect
“In the long term, it is clear that buying a house is cheaper than renting it, also thanks to the capitalization effect of mortgage payments,” adds Spiezia. “In Milan, for example, if you decide to rent a property for 25 years (the hypothetical duration of the mortgage, editor’s note), you will spend around 390,000 euros in rent without taking into account increases due to the capitalization effect.inflation. If you opt instead for the purchase with an 80% mortgage, you will have to pay monthly installments totaling 362,100 euros, which represents a saving of 27,900 euros compared to rent. To this advantage, in the case of a first home, we must add the possibility of deducting 19% of the purchase price from the income tax declaration. interests notandvi with a ceiling of 4,000 euros per year. And if the buyer is a young person under 36 and an Isee not exceeding 40,000 euros, it is also possible to benefit from the exemption from payment of the substitution tax and the mortgage tax on the loan and the zero registration fees on the deed of sale”. ()
