Youth mortgage: what will happen in 2024

The government is considering extending the 80% benefit on the capital share of mortgages for young people under 36. However, it is essential to understand which financial institutions currently offer the best conditions at both fixed and variable rates.

Among the numerous amendments to the asset decree submitted to the Senate’s joint environmental and industry committees, one in particular, proposed by Gianpietro Maffoni (Brothers of Italy), aims to postpone the deadline for submitting the application for access to the first home fund until December 31, 2024.

This amendment also provides for a reduction in the income limit from 40,000 to 30,000 euros per year. As soon as the examination process begins, attention will be paid to the more competitive conditions offered by banks to young people, both at fixed and variable rates, in the month of September

The extension of the benefits for young people under 36 when buying their first home would certainly be positive news for potential borrowers and for the real estate market. Please note that this rule was introduced in the Sostegni bis decree in June 2021 by the Draghi government and had a significant impact on the mortgage market in the second quarter of 2021 and 2022, with an increase of 26% in requests for mortgages for the first home and 31% in requests from young people
under 36 years old.

However, it is observed that if the guarantee is reduced from the current 80% to 50% of the capital share and access is limited to ISEs below 30,000 euros, instead of the current 40,000 euros, this rule risks having an extremely limited effect, especially in a context of inflation above 5% and fixed rates above 3.5%. Industry experts, on the contrary, hope that the extension of the rule may also involve other categories of borrowers, in order to stimulate the market and provide support at
such a delicate time.

Subsidized mortgages for young people under 36: an opportunity for total tax exemption

For young people under 36, there is currently the possibility of taking advantage of a total tax exemption for the purchase of properties until December 31, 2023 (as confirmed by Law 197/2022 throughout 2023). Thanks to this benefit, people who have not yet turned 36 years old in the year the contract was signed and with an Isee of less than 40 thousand euros can
benefit from some tax advantages.

During the act of sale, these young people will be able to enjoy an exemption from registration tax and from mortgage and cadastral taxes. In addition, they will be entitled to a tax credit equal to the amount of VAT paid, if due. In relation to the financing act, on the other hand, they will be able to benefit from an exemption from the replacement tax equal to 0.25%
of the total amount.

This opportunity represents an attractive solution for young people who want to buy a home, allowing them to take advantage of significant tax advantages. Taking advantage of this total tax exemption can therefore be a smart choice for those who are in the right age group and who meet the
required requirements.

The mortgage for young people: the best conditions available

Are you young and want to take out a mortgage to buy your first home? Here’s a simulation using real market data that might interest you. Let’s imagine that you are a 33-year-old employee and want to apply for a 30-year mortgage for an amount of 160 thousand euros, while the value of the property you intend to buy is 200 thousand

If you choose a fixed rate, the best conditions are offered by Bnl – Bnp Paribas Group, with a monthly installment of only 718 euros for the entire duration of the loan. This is followed by Bper Banca (736 euros), Banco Bpm (747 euros), Intesa Sanpaolo (750 euros) and Webank (764 euros)

On the contrary, if you opt for a variable rate, the most advantageous installment for a mortgage taken out today is proposed by Bcc Milano (792 euros), followed by Ing (811 euros), Banco Bpm (837 euros), Bper Banca (835 euros) and Banca Popolare Pugliese (840 euros).

The best choice between fixed and variable rates is subjective, but let’s think about the factors. Experts say that it is difficult to predict the trend in rates. However, most analysts assume that the European Central Bank will not raise rates in the near future, but will keep them high until inflation reaches 2%. According to the forward curves, the Euribor is expected to reach its peak in November and then stabilize until it begins to decline in mid-2024

Considering the unstable nature of the current situation, however, we still recommend opting for a fixed-rate mortgage. At the moment, the fixed rate costs an average of 100 basis points less than the variable rate, certainly allowing you to save on the monthly installment during the first months of the mortgage’s life. In the future, if rates decrease, it will be possible to evaluate a fixed-to-variable switch through subrogation

Stay up to date and make a thoughtful decision based on your needs and market forecasts. For more information and personalized advice, please contact our branches.

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