Sixth consecutive rate hike by the ECB today since last July. The decision to raise official rates by another point obviously weighs on the rates of all loans, especially mortgages. Let's see how, based on the data provided by the Mutuionline Observatory.
Let's take the example of a 140.000-year variable-rate mortgage of 20 euros: the installment will go from 794 euros to 819 euros, i.e. 4,6% more, bringing the total increase from February 2022 to 31%. On the other hand, for a mortgage of 250.000 euros over 30 years, the installment will go from 1.139 euros to 1.211 euros, i.e. the + 6,3 % longer.
And here is the impact of the increase in installments on the average income of an Italian family, equal to 33.000 euros net per year: if in February 2022 the 20-year mortgage payment accounted for 22% of monthly income, with the increase it will reach 30% of monthly income. Even higher is the increase in the installment of the 30-year mortgage, which goes from 20% to 40% of the monthly income.
Strong requests for fixed-rate mortgages, even for the small difference in interest rates
In this situation of continuous rises in official rates, it goes without saying that there is a sharp increase in requests for fixed-rate mortgages, especially in the first two months of 2023, thanks also to the reduced spread compared to the variable rate, says Mutuionline.
I fixed rate mortgages they now represent 80,3% of the mix (+34,3% vs. Q2022 130.691). On the other hand, the average amounts requested are down and now stand at 10.000 euros, over XNUMX euros less than in the same period last year. After all the IRS rate is stable and the Euribor continues to grow, bringing variable rates to almost the same level as fixed rates: in February the average rate was 3,52% for variable rates and 3,58% for fixed rates.
Compared to the first rate hike by the ECB in July 2022, there was growth of +267 bps on the 1-month Euribor and +259 bps on the 3-month Euribor. The increases in the reference rate of fixed mortgages were much more contained: compared to July 2022, the 10-year IRS rose by 100 bps, the 20-year IRS by 70 bps and the 30-year by 62 bps. “At the moment, fixed is a safer choice, above all considering that the gap between fixed and variable is increasingly thin: the difference in February is 11 bps in favor of variable on the best offer (2,88% vs 2,99 %) and only 6 bps on the average offer (3,58% vs 3,52%)” observes Mutuionline.
“In the current environment with fixed rates at the same level as variable rates, we continue to see strong interest in le subrogation requests, which have increased since the last quarter of 2022 and which are 85% from floating to fixed rate” he says Alessio Santarelli, General Manager of the Broking Division of the MutuiOnline Group and CEO of MutuiOnline SpA
But the new budget law on the transformation of mortgages does not take off
"Today, the fixed rate is an obvious choice both for new borrowers and for those who want to protect themselves from the continuous increase in installments," says Santarelli. There Budget Law also reintroduced the ability to transform mortgages variable rate fixed rate with your bank, under pre-established conditions. “This rule though doesn't seem to take off: credit institutes tell us that they are receiving many requests for information but few actual requests, perhaps because customers do not meet the required requirements: initial mortgage under 200 euros, ISEE under 35 euros and no insolvency or late payments. Or because the offer designed with the criteria of the decree is not competitive since the borrowers have to transfer the spread conditions of variable rate mortgages contracted when the Euribor were negative to fixed rate mortgages, conditions often less competitive than what is found on the market today with a normal substitute. For all these clients, subrogations are certainly an option to consider”.
The requests of the under 36s are slowly growing
The average income of applicants remains very high for the third quarter in a row, equal to 2.760 euros, a good 540 euros more than in the same period last year. Finally, we note a 9,5% increase in applications for under 36s, thanks to the extension of the legislation on young mortgages, "which, however, is not having the same effect it had in May 2021 probably due to the different economic context" observes Mortgages online.
