The ECB’s interest rate hike brings the real estate market to a standstill
High interest rates are changing the spending plans of Italian families who are putting off buying a home. This emerges from a study by Autonomous Association of Italian Bankers (Fabi) about the rise in interest rates and the impact on mortgages, highlighting the decline in the proportion of people taking on debt to buy a property from 50% to 41%.
What is happening in the mortgage market?
According to Fabi, the ECB’s increase in the cost of money to 4.5% has tripled banks’ interest rates on mortgages to families. At the end of December last year, the average interest rate on home loans was 4.40%, exactly three times compared to 1.45% in January 2022, the lowest level in recent years.
This resulted in the dizzying increase of 295 percentage points in just 24 months the number of mortgages is falling, in particular in 2023 by 2.3 billion euros (an average of 192 million per month), after an increase of over 35 billion in the previous two years.
According to Fabi data, revised based on Bank of Italy statistics, without taking into account any securitization, The amount of mortgages in January 2021 was 392.3 billion and that year it rose at a rate of 1.5 billion per month and closed at 409.9 billion in December of the same year.
In the following 12 months, the pace of growth slowed slightly to 1.4 billion, bringing the year-end total to 426.9 billion, compared to 410.3 billion in January. In 2023 there was an immediate trend reversal and weakening: the first decline of around 600 million already in January (share to 426.2 billion) and then a progressive, albeit slow, decline to 424.6 billion last December: the average monthly decline was 192 million, a total of 2.3 billion euros over 12 months (-0.54%) .
To add variety: “It will be crucial for the European Central Bank to accelerate the start of the process of reducing the cost of money.” The easing of monetary policy now expected by most observers is essential precisely so that the banks themselves can control the real estate market be able to support again as soon as possible. For Italy, it means giving oxygen back to a fundamental part of our economy, worth several points of GDP, if we count all the sectors related to buying and selling and all the so-called related activities,” explained theThe Secretary General of Fabi, Lando Maria Sileoni.
Real estate sales, net decline in 2023
The impact of high mortgages on the real estate sector is clear from the data third quarter of 2023, which confirmed that Sharp decline in residential property sales, in our country, which began in the fourth quarter of 2022, after continuous and accelerated growth since 2020. The decline recorded in the first nine months of 2023 affects the entire territory and all types of housing.
The number of sales at the end of September 2023 was 507,879, compared to 576,115 in the same period of 2022, a decrease of 11.8%. Natural persons are buyers of around 95% of properties: of these, 62% have benefited from the first home aid (percentage decrease compared to 65.3% in the same period in 2022 and 68.4% in 2021).
