After 24 consecutive months of strong growth, the surprise comes with the December data. So we find that mortgage rates start to fall. In fact, 2023 ends with a drop in the rates applied by banks on new mortgages. This was revealed by the Abi, which in its monthly report reports that in the last month of the year the average rate on new transactions for the purchase of homes decreased to 4.42%, compared to 4.50% in November.
And if in December the rates applied by Italian banks on new mortgages fall while those on loans to businesses continue to rise. The point of reference is always the monthly report from the Abi, which indicates how the differential is widening compared to the rates applied on new loans to businesses, which rises to 5.69% from 5.59% in November. Compared to December 2021, when the data for businesses was 1.18% and that for mortgages was 1.40%, the divergent trend is confirmed with an increase of 451 basis points for non-financial companies and 302 for the purchase of homes. The effect on the average rate of all loans is to leave the value unchanged compared to November and equal to 4.76 percent.
The reason that pushes rates down
The reversal of trend compared to the last two years (remember that during the pandemic period mortgage rates, in some cases, were even below 1%) is easy to understand. The ECB’s financial policy has led, over the last 24 months, to an increase in interest rates on loans with the aim of fighting inflation. However, the interbank loan market had already seen a reduction in rates since the end of November. A fact that the markets, the true thermometer of financial trends, have intuited and actually anticipated, so much so that the ECB should start reducing the cost of money from this year. For the moment the market has responded like this: a slight decline in rates for house purchases, but an increase in deposits.
How the market will change
What will be the effect of falling interest rates on mortgages? It is still early to say, even if the first expert reports define 2024 as another year of contraction for the real estate market. This was revealed by the Research Office of the Tecnocasa Group, whose latest estimates indicate a continuation of the trend already highlighted in 2023, when the number of sales stood at 680 thousand (down on 2022). This year, therefore, we will go a little lower with volumes expected to be around 650 thousand. «Nothing to worry about – they explain from the Tecnocasa Group Research Office. However, it is “a good number of transactions and a healthy market” states Fabiana Megliola, Head of the Tecnocasa Group Research Office”.