About 20% of mortgages issued by banks are 100 percent. The tendency of customers to ask for a loan that covers the total cost of purchasing a house is spreading in Italy, although not at the level of Anglo-Saxon countries, where this is a highly developed practice. The reasons: it is a mortgage intended for a specific segment of customers (generally young couples and singles), which however, given the high risk it entails for the banks, requires a higher cost than more traditional mortgages, which cover up to 80% of the cost of the house.
The question. 'The growing demand for mortgages that can finance up to 100% of the value of the property - explains Jacques Lanternier, CEO of Banca Ucb - is a phenomenon induced by two factors: the constant growth of property values and rents. This trend in recent years associated with a very low level of interest rates has led many families to prefer ownership to renting. We usually suggest preferring a long repayment duration, which allows for a lighter instalment. For this reason, Banca Ucb will offer, from June, the opportunity to access a thirty-year loan, with the possibility of covering up to 80% of the value of the house.
For Abbey National (100% mortgages account for 20% of the total mortgages disbursed) the profile of the customer who requests loans above 85% is that of people under the age of 35, who live in rent and are employed. The average sums disbursed are 104 thousand euros for mortgages below 85% and 121 thousand euros for loans above this threshold. The duration of 100% mortgages increases: if, in fact, it is 20 years for loans lower than 85%, it rises to 26 years for those higher. 'It is a solution - Abbey National says - designed specifically for a market segment that had specific needs'.
As a guarantee. The costs of the mortgage do not change, but the cost of a life or job loss policy is added which the bank asks the customer to take out as a guarantee 'with a cost that affects 1-2% of the total expense'.
Supplementary life or home insurance policy also for the Mortgage Division of Meliorbanca, which offers 100% loans with the Easy Mortgage product.
It's true that with a 100% mortgage you spend a little more, but over 30 years the expense is diluted and you pay as if you were renting, they say at Banca Toscana. 'We finance 100% only for the purchase of the first home - explains Maurizio Fedi - with products such as Young couples or Young singles, up to 45 years of age with an increase in the spread of 20 percentage points compared to that of mortgages up to 80% (see table below, ed.). Only the spread changes, because the bank has greater risks. We have recorded a response of 25% of the total mortgages disbursed.'
source: Real Estate Observatory
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