In July, inflation settled at 7.9% on an annual basis, just below the 8% recorded in June. The general increase in prices does not necessarily save the cost of mortgages, pushed upwards also by the monetary policy of the European Central Bank (ECB) which on 21 July increased the director rates by 0.5%. The effects on mortgages are already measurable and it is difficult to make reliable forecasts for the near future.
A look at the cost of mortgages
We are in the wake of a cascade effect. Inflation expectation and inflation itself have an impact on the Eurirs index which determines the rate of fixed mortgages. The increase in the cost of money implemented by the ECB to curb inflation determines a growth in the Euribor, the calculation of which enters the formula for calculating the rates of variable mortgages.
The effects were felt several weeks in advance as, during the month of June, loans disbursed for the purchase of properties rose to 2.37% compared to 2.27% in May 2022 (both rates include the Taeg, ie the ancillary costs of credit). Variable rates could exceed 2% but, at the present time, several credit institutions offer rates close to 1%. The data collected in the Banks and Money report, published on 9 August by the Bank of Italy, however, indicate increases of different orders for other types of credit.
The cost of credits
Capital borrowed from citizens and not intended for the purchase of real estate cost 8.34% in June, up from the 8.25% recorded in May.
Loans to non-financial corporations in June cost 1.44% against 1.19% the previous month. These are average values, as is the average figure for the remuneration of deposits, steady at 0.31% with no increases compared to the rate for the month of May. Some lenders grant to new customers interest rates close to 1.75%.
The future of rates
The Euribor, or the index that determines the cost of variable rate mortgages, is the one that is most influenced by the policies of the ECB. The difference between the rates of fixed mortgages and the rates of variable ones will be increasingly subtle, even if it is not very serious to make more detailed forecasts. During the next three months it is possible that floating rates will exceed 2%, while fixed rates are expected to remain stable. Conditional is mandatory, because it becomes an increasingly requested model that in 2022 reached growths of 30%, thus becoming a tool increasingly requested by citizens.
The bond market also follows the influence of the rates imposed by the ECB. Yields are typically already rising and it is more than likely that they will continue to do so.
It is useless to launch into further predictions, economics is a social science and it needs time to clearly read both the direction it is taking and how the actors who animate it are reacting. The data relating to very short periods of time do not represent certain indications, but only indicative.