Here comes the tightening of the ECB, increasingly expensive fixed mortgages...

...but the 'variable' is gaining ground!

THE fixed rate mortgages they become more and more expensive. Thus, the "chase" of the variable continues to conquer more and more preferences.

As market average, the last one survey by the Bank of Italy says that i mortgages cost an average of 2.01% as APR (Annual percentage rate). A year ago, the level stopped around1.6%.

But this survey dates back to March and, in a short time, the panorama has changed. In recent months, if the variable has moved little, on the contrary, the fixed has continuously grown, due to the rise in its reference index, theIrs.

Compared to the beginning of the year, the 30-year IRS went from 0.53% on January 3 to 1.75% on May 31, the 25-year one from 0.57% to 1.86%, the 20-year one from 0.60% to 1.97%.

In essence, they are more than values tripled. This is why the "fixed"it always costs more, even with the same"spread”, i.e. that percentage that is applied to the rate and which represents the bank's profit.

Even taking a look at the online mortgage comparators, which often show the most advantageous offers from banks, today for a 20-year fixed rate, at least 2.40% APR is required.

It seems like a level that is light years away from those of a year and a half ago, when one could hope to take home a loan even at less than 1%. Instead, to stipulate a variable rate, you can easily recover an APR lower than one percentage point, let's say around 0.8%.

Assuming a loan of 100 thousand euros over 20 years, with the fixed one you pay an installment of around at least 515 euros per month, while with the variable one 450 is enough. The surge in the "fixed" rate is so sudden that, according to the Codacons, the same type of mortgage contracted at the beginning of the year (100 thousand euro loan), compared to one signed at the beginning of June, entails a total final aggravated expense of 17 thousand euros.

The ECB tightening also involves the variable

We are therefore returning towards a market situation in which the “variable” dominates, which allows you to start repaying the mortgage with a lighter instalment? Making predictions is difficult.

Inflation in Italy and Europe is making itself felt. Energy, petrol and food cost more. And there are doubts about the stability of the economy and consumption between now and the end of the year. An uncertain scenario, which should advise caution and therefore in theory it would be wise to rely on the "fixed" option, where the installment is heavier, but at least the customer is protected from any future increase, because he enjoys the certainty of the fixed installment.

However, on the one hand, consumers often look to the short term and are therefore attracted by the lightest installments available. And then, in fact, today the range that separates the reference rate of the fixed (IRS) and that of the variable, the Euribor, is very wide, since the 3-month Euribor (beginning of June) is still negative by a few decimals, while the 6-month Euribor is around zero.

The ECB has already announced one for July tightening on the cost of money by 0.25%. This will lead to an increase in the Euribor and, therefore, will cause a increase in installments also for variable rate mortgages. But before the gap between the fixed and variable reference indices is closed, many rate adjustments would be needed. A scenario that is possible in the long term, but certainly not in the short term. Therefore, it is foreseeable that the share of those choosing the variable option will continue to grow in the coming months.

Fewer subrogations and mortgages for young people

The current scenario is also having an impact on two other fronts regarding mortgages. First of all, the “subrogation”, i.e. the free portability of financing, from one bank to another, in search of better treatment.

THE'surge in the cost of mortgages, at this time, it makes it difficult to switch to a new credit institution, with better conditions than the previous ones. Furthermore, there is a technical aspect that is holding back the stipulation of subsidized mortgages for young people, namely i mortgages for Under 36s who enjoy the State guarantee fund, managed by Consap.

The fund, in fact, allows this category (provided that certain ISEE-level criteria are respected) to also access 100% mortgages, which cover the entire value of the house, without having to pay a down payment.

One of the conditions, however, is that the APR proposed by the institutions does not exceed the so-called "effective global average anti-wear rate (TEGM)" set every three months by the Bank of Italy. This threshold, until 30 June, is 1.99%. But, as we have seen above, the banks' offers, at a fixed rate, now well exceed 2%. Therefore, at least until July, when the anti-usury thresholds will be updated, the disbursements of 100% at a fixed rate remain substantially blocked. 

Renting as an alternative to buying

Beyond the technical aspects, bro inflation And inadequate Italian salaries, another much debated topic in this period, the house is becoming more and more a worry for families. And the share of those looking at renting, giving up the dream of buying, is growing.

According to a recent analysis by Nomisma, households that have signed a rental contract for more than 6 months (therefore a rental to live there, not for tourism) have increased within a year, from 4.2% to 5.6% of the total Italian families. And of these, 58.7% did so because they believe renting is the only viable way to find a home, while there is 15% who at least in theory would have the resources to buy, but are scared by the idea of ​​making such an onerous commitment.