Explore Italy’s evolving home loan market: fewer subrogations and a surge in fixed-rate real estate purchase requests this year.
The Italy’s home loan market is experiencing a notable resurgence, characterized by a decline in subrogations and a marked increase in requests for real estate purchases, predominantly favoring fixed-rate mortgages. As we navigate through the complexities of this evolving financial landscape, it becomes evident that the mortgage sector is gradually stabilizing, exhibiting a positive trajectory throughout the year, alongside a discernible reduction in interest rates.
Data from the Revenue Agency for the second quarter of 2024 reveals a 1.2% uptick in residential sales, with mortgage-backed transactions climbing to 41.4%, a modest increase from 40.2% during the same period last year. This data underscores a dynamic mortgage market, increasingly skewed towards fixed-rate options, and a burgeoning participation from younger demographics, buoyed by slightly more favorable economic conditions.
In the third quarter of 2024, mortgage applications aimed at acquiring real estate—both primary and secondary residences—constituted 54% of total applications submitted via online channels, a rise from 51% in the preceding quarter. Conversely, applications for subrogation purposes witnessed a decline, dipping from 43% in the first quarter to 40% by the third quarter.
The preference for fixed versus variable rates remains overwhelmingly in favor of fixed rates, which accounted for an astonishing 99% of choices in the third quarter of 2024, mirroring the trends observed in the previous quarter. This phenomenon can be attributed to the persistent disparity between the IRS and Euribor indices, with the former maintaining lower levels despite recent reductions in the European Central Bank’s rates.
Examining the duration and amount of mortgages requested, we find that applications for mortgages exceeding 26 years represented approximately 38% of total requests in the third quarter, a slight increase from 35% in the second quarter. This figure surpasses the 26% of applications for durations between 16 and 20 years. Additionally, the average loan amount requested rose by 1.6%, reaching €146,469, influenced by the prevailing interest rate trends.
Geographically, Northern Italy (encompassing both the North East and North West) accounted for 54% of online requests in the third quarter, a marginal increase from 53% in the previous quarter. Notably, applicants under the age of 36 constituted 29% of the total, up from 27% in the preceding quarter, a trend likely bolstered by recent economic measures.
Demographically, the applicant pool is predominantly male, with 66% identifying as such, while females represent 34%. Employment status reveals that 89% of new requests originate from permanent employees, reflecting a slight increase from the previous quarter. Income distribution indicates that 48% of applicants boast a net monthly income exceeding €2,000, while 34% fall within the €1,000 to €1,500 range, and 17% earn below €1,000.
According to the CRIF Mortgage Compass, the fixed-rate mortgage continues to dominate the online channel, driven by the significant gap between the IRS (fixed rate) and Euribor (variable rate) indices, with the former remaining more economical despite the ECB’s recent rate cuts. Looking ahead, a continuation of the current trends is anticipated for at least the first half of 2025, as the Italy’s home loan market adapts to the evolving economic landscape.
