The love of the fixed rate is back. In recent months, in fact, those who choose to take out a mortgage for the purchase of their first home or decide to make a subrogation from one bank to another looking for a little more convenience seem to no longer even consider the variable rate. Simply, the latter no longer seems to be an option, having disappeared in the maze of economic and commercial uncertainty affecting Italy and the whole world.
The times seem light years away when, thanks to the drop in the spread and the massive intervention of the ECB on rates, the floating rate had recovered ground even going as far as, in 2014, to exceed the fixed rate (60% against 40%, galvanized by the new economic prospects. In just four years, not only has the percentage reversed but there is no longer even a match. The vast majority of citizens who decide to take out a mortgage are throwing themselves headlong into the fixed rate. In percentage terms, according to the surveys of MutuiOnline.it updated to 30 November 2018, we talk about the89% of new mortgage loan disbursements and as much as 92% of subrogation transactions. Put simply, only 1 out of 10 Italians, to date, opts for the variable option, despite the fact that the latter remains cheaper at present.
In fact, on an average level, a 20 or 30-year mortgage with a variable rate travels just over 0,83%, while with a fixed rate, more than one percentage point must be added (we are at 1,92%).
Why is this difference no longer taken into consideration? The reasons are varied, but fear seems to dominate all logical reasons. The economy is starting to slow down, global trade disputes are about to reach breaking point (read the trade war between the US and China) and looking at a smaller scale, Italy now seems headed towards stagnation. Italians no longer trust the economy and finance and are looking for solutions that give them greater security. The reasoning seems to be the following: if the variable rate is convenient in the short term, in a horizon of 20 or 30 years, surprises could arise in the face of which it is better to protect yourself from the outset.
The fixed rate allows you to always pay the same installment, regardless of growth, trade wars, the spread or the reckless budget maneuvers that a government intends to launch at the expense of mortgages and interest payments. The fixed rate protects against any fluctuation and represents a safe haven for those who intend to take the "big step" of buying a house and taking out a mortgage.
In this context it is necessary to underline a recent phenomenon related to subrogations. If in the recent past those who decided to carry out this operation did so to switch from a fixed rate to a lower one or from a fixed rate to a variable rate, today they are the subrogations from floating to fixed rate increased sharply, giving up convenience for safety.
Obviously, the choice is also influenced by the fact that the fixed rate is currently at an all-time low and that credit institutions also prefer fixed over variable to minimize risks, but given the percentages, any other type of explanation appears superfluous.
In conclusion, it seems useful to report another figure: in November, according to the Abi, Mortgage rates have increased in Italy for the second consecutive month,passing from 1,88% in October (average figure) to 1,91%. At the basis of the increase, according to Gianfranco Torriero, deputy general manager of the Association, there is the increase in the spread in the yields of sovereign bonds”. Perhaps, therefore, prudence is not entirely unjustified.
