The mortgage market is cooling down in Italy

07 January, La Repubblica

Subrogations are decreasing and applications for mortgages fell by 10.3% in 2017, after three consecutive years of continuous growth. The information comes from Eurisc, the credit informative system of Crif. The data might seem not consistent with the positive variation reported in the latest report by Abi (in October mortgages grew by 3.4%). However, the figures from Abi are related to the issuances from banks, while those from Crif concern the number of applications (preliminary investigations, not simple information requests or quotations). Crif interprets positively the figures: “The slowdown of subrogations, that heavily impacted the performances of the past years, has hidden the good results of new mortgages, that are supporting the recovery of the real estate market”, says Simone Capecchi, Crif executive director. He also clarifies that “we expect new mortgages to grow further in 2018, thanks to the steady levels of rates, that will remain at their minimum”.

Despite this, even if the numbers reported by Crif are not so negative as one might think, it emerges a slowdown of real estate. In fact, the market, after a phase of solid recovery, seems to have moved to a phase of contraction for what concerns transactions numbers.

We’re not talking about a standstill, but also Nomisma in its last report published at the end of November mentioned a “slightly decreased enthusiasm”, considering that the performance for 2017 was for 545,000 transactions, with an increase of 5%, definitely lower than the 16% registered at the end of 2016. Certainly, people are still buying and selling houses, even though “in a more cautious way, taking into account the weaknesses still present in the market”. However, as the figures published by Crif show, the era of subrogations is over. It’s time now for actual mortgages to finance the purchase of a house and not the negotiation of an existing debt. The average requested amount has grown, reaching in December 127,505 euro, 6,312 euro more from the beginning of the year. Moreover, even if the applications for mortgages have decreased compared to 2016, a particularly positive year, they still show an increase in comparison with 2015 (+0.9%), and a more consistent growth than 2014 (+56.4%), 2013 (+78%), and 2012 (+70.8%). Those years, in fact, were very heavily impacted by the contraction of the market.

Almost one-third of Italian families, representing the biggest group of applicants, is placed in the amount range comprised between 100,000 and 150,000 euro, while 20.4% request amounts from 150,000 to 300,000 euro, only 3% requests over 300,000 euro. If we consider age, the biggest group is composed of people aged between 35 and 44 years. The under 35 group has grown a little, by 0.4%, which is the group with the most difficulties to start a mortgage. The favourite duration is between 16 and 20 years, durations over 20 years have grown by 2.6%, a sign of the persistent financial difficulties of families. It’s not by chance that Abi made an agreement with the consumer associations for a moratorium on the capital share for whom is in financial difficulties which has been recently extended to 31 July.

Source: La Repubblica

Translator: Cristina Ambrosi

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