Real estate purchases and sales in Italy, considering the first nine months of 2022, remain on the rise despite the drop recorded by ISTAT in the third quarter of the year; however, it is mortgages, loans and other bonds with real estate mortgages that are falling over the same period. The data published by ISTAT are thus confirmation of a reversal in the trend in mortgages that has been recorded for several months in Italy. Codacons (the Coordination of associations for the defence of the environment and the protection of user and consumer rights) has also sounded the alarm on the increase in mortgage instalments in Italy, which have become substantial compared to two years ago, possibly resulting in a slowdown in demand for home purchases through bank financing.
ISTAT points to a decline in demand for mortgages in Italy as early as the third quarter of 2022. Notary agreements for mortgages, loans and other obligations with the constitution of a real estate mortgage were in fact 95,945 (-5.5% compared to the previous quarter and -7.4% on an annual basis). The decrease was homogeneous across the entire territory, both on a cyclical basis (South -10.0%, Islands -8.3%, Centre -6.6%, North-East -4.2%, North-West -3.4%) and on an annual basis (Centre -8.7%, North-East -8.2%, South -7.4%, North-West -6.6%, Islands -4.4%, Metropolitan Cities -8.2% and small towns -6.8%).
The drop in demand for mortgages follows the increases in interest rates, which, according to Codacons, is causing the instalment to rise to such an extent as to inhibit future demand for home purchase loans, which could reverberate in a drop in overall property sales.
A variable-rate mortgage, according to Codacons, now costs up to 4,236 euros more than in 2021, while a fixed-rate mortgage costs 3240 euros more. In September 2021, a 150,000 euro variable rate mortgage with a 30-year duration had the best TAEG (Annual Percentage Rate) at 0.48 per cent (instalment of 442 euros) while for a fixed rate it was 1.04 per cent and an instalment of 481 euros. Today for the same type of mortgage the TAEG has risen to 3.62 per cent and 3.17 per cent, for an instalment increase to 663 and 631 euros respectively.
The same applies to a 25-year mortgage of 100,000 euros: if in September 2021 the TAEG on the variable rate was 0.42% with a monthly instalment of 346 euro, while the fixed rate saw a TAEG of 0.98% and an instalment of 370 euro, today for the same mortgages the minimum TAEG is 3.62% for the variable rate and 3.24% for the fixed rate, with a monthly instalment respectively increased by 145 and 104 euro compared to two years ago.
According to ISTAT data, in the third quarter of 2022 there were 220,995 notarial purchase and sale agreements and other agreements relating to real estate transactions (-2.7% compared to the previous quarter and -1.0% on an annual basis). Compared to Q3 2021, real estate transactions decreased by 1.1% in the residential sector, while they increased by 1.1% in the economic sector.
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