Italian homebuyers and homeowners are currently on high alert due to growing concerns about increases in mortgage interest rates. However, the challenges in the mortgage industry don’t stop there. Starting from September, other changes are expected that could significantly affect mortgage lending in Italy.
Forecasts from September
The mortgage landscape is currently under increasing pressure due to expectations of higher interest rates. This can translate into higher monthly payments, putting a strain on Italian family budgets
The Italians face a difficult prospect. In addition to rising costs in the food, insurance, school, and fuel sectors, another enemy looms: mortgage overruns. And starting in September, both variable rate and fixed rate mortgages could see significant increases.
The economic situation, already precarious due to high interest rates, threatens to bring many families to their knees. An increase in mortgage payments could affect the local budget, while the purchasing power of salaries continues to decline.
Experts warn that variable rates will rise in the coming months. It appears that the 3-month Euribor, an important indicator of variable rates, currently at 3.77%, is destined to align with the ECB rate in the next 2-3 months. And an increase in the ECB rate to 4.25% in July adds to the tension.
But it’s not just floating prices that are in the spotlight. Even fixed-rate mortgages, which are stable to begin with, are showing signs of increasing. The IRS, which affects fixed-rate mortgage rates, rose about 10 basis points. If this trend continues, we can expect increases in fixed rate mortgages from September onwards.
Shadow tax on additional profits
The government’s decision to tax banks’ excess profits added to the uncertainty. The move is expected to limit access to credit. According to the Bank of Italy, in the second quarter, the number of operators who struggled to obtain a mortgage increased by 0.8%, to 30.9%. This level is the highest since 2014.
Banks are not the only ones in turmoil. There is a fear that banks may reduce the availability of credit due to the tax on extra profits. This can further hinder families and businesses that need financing for their projects.
advice
At a time when financial education is more important than ever, it is critical that homebuyers and homeowners be prepared for these challenges. Here are some tips that may help you:
- Check your financial situation: It is essential that you understand how much you can afford in terms of monthly payments, especially in the context of potential price hikes.
- Consider Fixed Rates: If possible, it may be time to consider switching to a fixed rate mortgage, to guard against any future fluctuations.
- Consult financial experts: Talking to a financial advisor can help you plan accurately and make informed decisions.
Against the backdrop of rising loan rates, for both homes and businesses, and declining deposits, Italy’s economic prospects are becoming increasingly uncertain. Staying informed, planning wisely and seeking financial advice are vital in dealing with this turbulent economic climate.
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