La mortgage installment always becomes highest reflecting the interest rate hikes that the European Central Bank is carrying out to curb inflation. In November, rates on mortgages and loans in Italy returned to their highest levels since 2014 and meanwhile, loans to businesses and households, while positive, are slowing down. But the interest rate race will also continue in 2023 and consequently the monthly mortgage payment will increase further. The latest surveys released by Bank of Italy, in November 2022.
The situation is starting to become unsustainable for many families, already grappling with other price increases between expensive energy and the shopping cart. But what to do if you can't pay the mortgage payment? There are three solutions to lighten costs: renegotiation, subrogation and variable rate with cap.
Mortgage rates jump to their highest in 8 years
According to the latest findings of Via Nazionale, the interest rates on loans disbursed to households for the purchase of a house including ancillary costs (annual percentage rate, Taeg) jump to a nine-year high: from 3,23% in October to 3,55% in November. Those on new consumer credit disbursements, on the other hand, jumped to 9,25%, a rate not seen since March 2014 (8,93% in October).
Interest rates have also increased new loans requested by non-financial companies, which amounted to 2,94% (it was 2,54% in the previous month). The rates on amounts up to 1 million euro were equal to 3,37%, while those on new loans for amounts exceeding this threshold stood at 2,67%.
Rates go up, but so do loans (slightly)
Despite the higher rates, Bank of Italy specified that the number of loans requested continues to rise, albeit slowly. Again in November 2022, loans to the private sector grew by 3,5% (they were already at 3,4% in October), while those to families they increased by 3,8% (4% in October).
Novelties are registered on the front of deposits. The last glance of 2022 recorded a change of sign on the trend of bank deposits which in November showed a drop of 0,3% over the year, after the 0,2% drop recorded in the previous month. The last drop in deposits, more negative than that recorded in this month, was recorded in January 2012, specifies Via Nazionale, when the change over the twelve months was equal to -0,79%. As for bond funding, it decreased by 3,2% over the same period of the previous year (-6% in October).
Renegotiation, subrogation and variable rate with cap: three solutions for too high mortgage payments
For those who are no longer able to meet the mortgage payment, due to these sudden increases in installments, the 2023 Budget Law provides for the possibility of renegotiate the mortgage with your bank and switch from variable to fixed without additional costs with a loan of less than 200 thousand euros and an ISEE under 35 thousand euros. Those in difficulty can also resort to the substitute, which allows you to transfer the loan from one bank to another to obtain more favorable conditions than those stipulated initially. There is also the option to take out a mortgage variable rate with cap, i.e. a maximum ceiling beyond which the installment cannot rise for the entire duration of the loan.
High mortgage rate: more increases are on the way
The problem is that the race for variables does not seem destined to stop, since the European Central Bank does not intend to loosen the belt on the cycle of interest rate increases, with inevitable negative repercussions for those who have a mortgage on their shoulders. After the umpteenth hawkish declarations of the German Isabel Schnabel, other members of the Frankfurt board confirmed the orientation for the next meetings, Robert Holzman, the Austrian member of the Executive Committee, during a speech in Vienna reinforced the dose by declaring that "interest rates will have to increase significantly further to reach levels restrictive enough to guarantee a timely return of inflation to the medium-term objective by 2%". For Holzmann "the course of the ECB will not change until core inflation eases" and this moment has not yet arrived given that "core prices have not yet reached their peak".
Looking at market expectations, Euribor Futures, experts predict that by June 2023 theEuribor at 3 months it will still grow by almost a point and a half. In that case, your monthly mortgage payment will continue to increase.
