Italy experienced a notable decline in the average cost of new home mortgages, dropping to 4.42% in December from November's 4.50%, as reported by the banking association ABI. This represents the first significant decrease in 24 months, attributed to the prevalence of fixed-rate mortgages for households. Meanwhile, corporate loan rates continued to rise, reaching 5.69% in December compared to the previous month's 5.59%. The disparity is explained by the higher Euribor rate for floating-rate debt compared to the IRS rate for fixed-rate loans. The shift in rates reflects contrasting borrowing patterns, benefitting households but increasing costs for businesses.
The average cost of new home mortgages in Italy dropped to 4.42% in December, a slight decrease from the 4.50% recorded in November, according to data from the banking association ABI. This marks the first significant decline in 24 months, as previous apparent drops were attributed to changes in the mix of floating and fixed-rate mortgages. Notably, 80% of new home mortgages for households are fixed-rate, while businesses typically opt for floating-rate loans.
ABI Deputy Director General Gianfranco Torriero explained that the Euribor rate, used to determine floating-rate debt, is currently higher than the IRS rate used for fixed-rate loans. This dynamic contributes to the observed decrease in the cost of new home mortgages while corporate loan rates continue to rise. The average cost of new loans to businesses increased from 5.59% in the previous month to 5.69% in December.
The shift in interest rates reflects the distinct preferences and borrowing patterns of households and businesses in Italy, with households benefiting from the drop in mortgage rates, while corporate loans become more expensive. Torriero emphasized that this change is a noteworthy development, marking a positive turn for households seeking home mortgages.
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