Mortgage rates are still rising. In the wake of the ECB's increases in the cost of borrowing, interest rates on loans continue to rise unabated, even exceeding 4.5%. A non-stop climb that may not be over yet considering that at the next meeting of the Eurotower on Thursday the board of the central bank is preparing to announce yet another rise.
According to Bankitalia's surveys, in April the annual percentage rate, i.e. the interest rate on loans granted to households for the purchase of homes including ancillary costs (the so-called Taeg), rose to 4.52% against 4.36% in March. That on new consumer credit disbursements reached practically 10.3%, compared to 10.1% in the previous month, and interest rates on new loans to companies also stood at 4.52%, compared to 4.30% in March.
All this while loans have reversed course, with a decrease of 0.5% in April compared to the same month of 2022 that compares with the increase of 0.3% recorded instead in March. However, while loans to households continued to grow by 1.4%, companies recorded a sharp decline of 1.9%, which weighed on the average. In search of yields to face inflation, which bank accounts no longer give, Bankitalia also recorded that deposits decreased by 3.4%, while bond funding increased by as much as 9.4%, further accelerating compared to 8.9% in March.
ECB policy is clearly unfolding its full effects. The iron will to bring prices back to a level considered acceptable for the mission of Frankfurt, is leading to an increase in rates that already weighs on investments (as highlighted by many analysts on the occasion of the release of data on industrial production), but also on the real estate market that inevitably lives largely on mortgages. If until the beginning of 2022 loans to households for the purchase of homes sailed on substantial flows and rates just above 1.1-1.2% with Taeg on 1.7-1.8%, the situation was reversed with the end of the expansionary monetary policy. Month after month, banks and the market have raised lending rates to where we are now, well over 4%. And a further possible increase is already foreshadowed.
On Thursday, a rise in the cost of borrowing in Euroland from 3.75% to 4% is taken for granted, followed almost certainly by another 25-point adjustment in July. Waiting for the projections on the effect of the increases on the economy that will affect the subsequent decision in September, Christine Lagarde will not be able to help but consider the latest data on the performance of the first quarter that marked the entry of the Eurozone into the so-called technical recession. All eyes will therefore be on the speech that the president will give as usual after the official announcement on rates, from which some new indications could emerge.
In the meantime, however, in Italy the accounts are being made. "Considering the amount and average duration of a mortgage, such a substantial rise in rates means that, the installment, for those who have now signed a variable rate mortgage, grows, compared to a year ago, from 595 to 768 euros, with an increase - calculates the National Consumers Union - equal to 173 euros per month. An annual sting of 2,076 euros". The Codacons instead denounces how in May it has already exceeded 4.6% with peaks, in some cases, even higher than 7%.