A favorable environment for mortgages
In recent years, the mortgage market has experienced a period of great instability, but now there are signs of recovery. With the recent reduction in interest rates by the European Central Bank (ECB), the reference rate fell from 4.50% to 3.40%. This change has stimulated an increase in requests for new mortgages and subrogations, which registered an increase of 7.2% in the first nine months of 2024, with a peak of 18.8% in September alone. These data, provided by Bussola Mutui Crif — Mutuisupermarket.it, highlight a renewed interest
on the part of consumers in the real estate market.
Preferences for fixed-rate mortgages
Despite the drop in rates, a significant difference persists between the IRS and Euribor indices, with the former remaining lower than the latter. This has led consumers to prefer fixed-rate mortgages, which collected 99% of the preferences in the third quarter of 2024. For example, a mortgage of 140,000 euros for the purchase of a property worth 220,000 euros, with a duration of 25 years, can obtain a fixed rate of 2.96%, with a monthly installment of 645 euros. On the contrary, a variable-rate mortgage for the same transaction has a rate of 4.29%, with an installment of 739 euros, a whopping 94 euros more. This difference in costs continues to push claimants toward fixed rate security, which offers protection against future surges in inflation.
Resumption of real estate sales
In addition to the increase in mortgage applications, the real estate market is also showing signs of recovery. After six quarters of contraction, the number of residential purchases increased by 1.2% compared to the same period of 2023. This increase is supported by the greater convenience of mortgages, which has brought the share of purchases and sales financed through new mortgages to 41.4%. However, the majority of transactions continue to be carried out by individuals and families who use their savings. The new monetary policy of the ECB, which provides for further reductions in Euribor rates, could instill additional confidence in the market, stimulating both the demand for mortgages and new disbursements
.
Property price trends
In the third quarter of 2024, there was an increase in the price per square meter of properties secured by a mortgage loan, with an increase of 0.8% compared to the same period of the previous year. Used properties saw a significant increase of 6.7%, while those of new construction registered a slower growth of 1.8%. At the territorial level, Central Italy and the South show the largest increases, of 1.1% and 1.0% respectively, while the North-West showed a contraction of 1.5%. The average value of a property secured in the third quarter of 2024 was around 168,000 euros, with an average stable commercial area of about 110 square
meters.