Is it possible to save up to 30, 40 or even 80 thousand euros on a 120 thousand mortgage? In theory yes, just make use of the subrogation. How it works is simple: with this tool you can move the debt from your bank to another institution that offers better conditions in terms of rates and duration, without additional costs (for example, no notary fees), but also without the possibility of change the amount that remains to be returned.
THE CURRENT FRAMEWORK: FIXED AND VARIABLE RATES, PAYMENTS
According to an analysis published by MutuiOnline.it, the first online broker in the sector in Italy, "the current situation is completely unique", especially as regards rates. To date, the best fixed-rate mortgage offers start at yields even lower than 3% for terms of up to twenty years, rising to just over 3% for longer maturities. The previous record dates back to late 2010, when the best fixed rates straddled 4%. As for variable rates, thanks to zero Euribor and continuously decreasing spreads, they currently start at 1,65%.
Furthermore, improvements have also been recorded on the disbursement front: according to the ABI, the new mortgages granted in February amount to 27,7 million, the first month of full operation of the Guarantee Fund for the home, which has an endowment of 600 million times to guarantee funding for 12-15 billion for the benefit of households in difficulty, especially young couples.
HOW MUCH AND IN WHICH CASES YOU SAVE WITH THE SUBROGA
The current scenario is therefore much more favorable than a few years ago. Immediately after the financial crisis, “mortgage rates had grown considerably – recalls MutuiOnline.it -. Anyone who took out a mortgage between 2011 and 2013, for example, still pays up to over 4% for the spread alone (against a wide range of spreads currently already below 2%), or fixed rates even higher than the 6%".
Not only that: the potential savings are very high even for loans started over ten years ago. "Only for fixed-rate mortgages taken out between 2002 and 2013 - the analysis continues -, the difference between the original average rates and the fixed rates available today is such as to allow, thanks to the subrogation, average savings of between 30 and 40 euros on an initial loan of 120 thousand euros with a duration of twenty to thirty years".
The same consideration is valid "both for mortgages dating back to the early 6s, when fixed rates far exceeded 2010% - continues the study -, and for more recent mortgages at lower rates, but still with many years of repayments ahead: on thirty-year mortgages taken out from 80 onwards, a subrogation could lead to savings of up to 100 thousand euros. Although it seems almost unreal, if the hypothesis of moving from a fixed to a variable rate were considered, the effect would be further amplified: in some cases the savings could exceed XNUMX thousand euros but, in this case, this measure would be uncertain as linked to the future trend of variable rates”.
On average, the subrogation offers the possibility of saving from two to 3 thousand euros a year. Therefore, the boom in requests is not surprising. In 2014, MutuiOnline.it recorded a progressive surge in subrogations on the total number of mortgages disbursed: from 7-8% to over 40% in the last months of the year. And in the first part of 2015 this percentage rose again up to 60%.
“Many people, however, still have no idea of how significant the obtainable savings can be – comments Roberto Anedda, Marketing Director of MutuiOnline.it – and thus continue to repay the old mortgage without taking into consideration the subrogation, perhaps convinced that it has passed too long now to gain a sensible advantage. It is estimated that there are currently at least one million fixed-rate mortgages still outstanding, taken out in more or less distant years. Obviously not all of them could be replaced, but there is certainly a large share that could benefit from the calculated savings. This leads to an estimate of possible overall savings of 3 to 4 billion euros for every 100 substitute mortgages through subrogations".
WHEN IT IS NOT CONVENIENT AND WHAT ARE THE ALTERNATIVES
But are there circumstances in which the subrogation is not convenient? Actually, yes. If the mortgage term is close, the subrogation could guarantee minimal savings, or be completely useless, because in Italy the banks charge most of the interest in the first half of the mortgage years. After two thirds of the duration, therefore, having the rate lowered makes less sense, because most of the interest has already been paid.
Furthermore, it is obvious that subrogation is not the only way forward. Borrowers have the right to ask their bank to renegotiate the initial conditions of the fixed-rate loan, to adjust them to the new rates. The institute may very well reject the proposal (on the other hand, renegotiating is not convenient for it), but in reality it is probable that it will seek mediation. Given the possibility of subrogation, the bank risks doing the competition a favor.
