The pandemic has not slowed down the desire for home in Italy. And the accommodative monetary policy adopted by the European Central Bank (ECB) continues to make it convenient to take out a mortgage. Better if at a fixed rate. Eurirs, the reference interbank rate used as a parameter for indexing fixed-rate mortgage loans, remains negative across the curve, from 10 to 50 years. The consequence is that those with liquidity have several opportunities to seize.
Covid-19 produced the most severe recession since the Second World War. The destruction of income and wealth held back trading in the first quarter, but the signs of a quick recovery are all there. According to the Studies Department of the Tecnocasa group, in the first three months of the year there was a drop in real estate transactions equal to 15.5% on an annual basis. A decline that could lead, at the end of the year, about 100 thousand fewer sales than last year. Despite this, purchase requests through the Tecnocasa network went from almost 59 thousand in March to 132 thousand in June. The first house is the master. Tecnocasa explains that “in the first quarter of 2020, 77.4% bought a property to use as a main residence, 17.0% for investment and 5.6% bought a holiday home”. The climate of low rates of the ECB, which will remain so until the economy returns to pre-crisis levels, is in fact encouraging the market for mortgages and subrogations. In the second quarter, according to the Mutuionline.it Observatory, applications for first home mortgages rose to 32.8% of the total, from 29.6% in January-March. The new high of the last twelve months.
The evidence is that taking out a mortgage today is cheaper than ten years ago. In 2011, the 25-year Eurirs, the one used to index fixed-rate mortgages, was 3.4 per cent. In 2013, around 2.75 percent. Then, the long decline, hand in hand with the easing of the monetary policy of the ECB. In March 2020, therefore at the beginning of the lockdown that hibernated the Italian and European spring, it was -0.11 per cent. But the June survey confirmed the arrival in negative territory, -0.13 per cent. A level that, according to the consensus of investment banks, will be maintained for years. Moreover, the indications provided by the ECB do not foresee a deviation from the current course. The more severe the recession, the lower rates will remain. All net of the second wave of infections from Sars-Cov-2.
In Italy, the most popular mortgage remains the fixed rate one. Again according to the Mutuionline.it Observatory, in June the average rate applied on mortgages between 20 and 30 years was equal to 0.82% for the fixed and 0.75% for the variable. In the case of the fixed, on the wave of the Eurirs never so convenient, this is the new historical low. To date, the mortgages considered best by Mutuionline are those of Carige, if we talk about fixed, and Unicredit, if we look at the variable. With the same profile (employed 35 years, resident in Milan, income 2,600 euros per month, loan amount 100,000 euros, property value 200,000 euros, loan duration 30 years), the first proposes a rate of 0.70%, the second 0, 37 percent. The average amount requested by borrowers from credit institutions also fell. In the period April-June it fell for the third consecutive quarter, reaching € 135,725, with a decline of 1.3% on a cyclical basis.
Although a certain liveliness has returned to the sector, and although this is facilitated by the measures of the ECB, not all that glitters is gold. According to Nomisma, during the first half of the year, 15.6 billion euros of impaired loans deriving from unpaid mortgage installments have already been formed, with 100 thousand households that risk becoming insolvent in the next few quarters and 160 thousand that already have a foreclosed property. Numbers that could get worse in the next few years if the country fails to engage the economic recovery.
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