How many have signed up variable rate mortgage they can breathe a sigh of relief. From the latest market surveys we understand, quite clearly, that the decline has begun. The path has been taken and should strengthen over the next few months, especially from the moment the ECB will decide to ease monetary tightening and will start cutting rates.
In the meantime, families have the opportunity to save by resorting to subrogations. Which appear to still be growing strongly, at least according to the latest findings carried out by the MutuiOnline.it Observatory.
Mortgages: families are under pressure
What is happening in the mortgage market? And above all, what is happening over the course of these weeks? According to a recent study by Crif, more than a quarter of mortgages active in January 2022 were at a variable rate. Installments increased, on average, by 36%; reaching a peak of 49% for loans that have been disbursed over the last five years. This has been a real drain on the finances of many families they have been put to the test by inflation and wages that have remained stagnant.
Of particular importance is a fact highlighted by Crif: despite the weight of the mortgage installments that were paid in the period between January 2022 and December 2023, theBorrowers’ indebtedness grew by 25% compared to 2019. We are faced with a surge that has very few precedents in history.
The growth dynamics of interest rates have led to a significant impact on variable rate borrowers in the last two years. The analysis conducted by Crif provides a detailed picture of this situation, noting above all how the financial exposure of subscribers to mortgages granted in the last 5 years has changed – he explains Simone Capecchi, executive director of Crif -. However, despite these impacts, the data highlights that there has not been a significant increase in the insolvency rate although an increase in financial stress has been observed. The prospects of a possible rate cut in June 2024 raise hopes for relief for borrowers, reducing pressure and helping to stabilize the financial situation. In any case, it is essential, in the current macroeconomic and geopolitical context of uncertainty, to remain vigilant to face the challenges that the scenario could present.
The increase in monthly installments resulted a worsening of the relationship between installment and incomewhich is up eight percentage points from mid-2022 lows.
Rates are starting to fall
Rates, however, have started to fall. According to what is indicated in the last one Abi monthly bulletinL’Irs ten-year rate recorded during the month of February 2024 was equal to 2.62%, bringing home a drop of 90 points compared to the maximum in the month of October 2023. Similar trend also for theEuriborwhich stopped at 3.93%, recording a decline of seven points compared to that of October 2023. In a certain sense it would seem that the market decided to bring forward decisions which many expect the European Central Bank to take.
Confirmations in this direction also come fromMutuionline.it Observatory. Looking at 20 and 30 year mortgages – which appear to be the ones most requested by families – the Average tan of the variable it is set at 5.04%, a percentage which is one decimal less than in November. Downward trend also for the fixed, which reached 3.29%, after having touched 4.05% in October 2023. This difference explains why in February the share of newly issued fixed rate mortgages reached 96.6%: during the third quarter of 2022 it was just over half. The variable share, however, halved compared to the fourth quarter of 2023, stopping at 2.4%. The mixed, however, stops at only 1%. Subrogations grew by almost fifteen percentage points during the last quarter of 2023: they constitute 36.2% of requests.
Mutuionline.it has done some simulations, from which it emerges that there are significant savings compared to twelve months ago. A mortgage, lasting twenty years and for the amount of 160,000 euros requested by a forty-year-old resident in Milan, provided for a fixed rate of 3.60 in March 2023 and an installment of 936 euros per month, compared to a current rate of 2.73% and an installment of 866 euros.
