First home mortgages, the guarantee fund for under 36s expires in June
The fund guaranteeing 80% of first home loans for young people will expire at the end of June. If the measure is not renewed, the fund will return to its original version, therefore with a 50% guarantee. This could have an impact on the 100% mortgages offered by banks to the under 36s, born precisely as a function of the “extended” guarantee to 80% expiring.
It should be emphasized that, when it was introduced, the measure allowed many under 36 to access advantageous conditions when signing the first home loan. According to the analysis of the online comparison site Facile.it, in the first half of 2021, applicants under the age of 36 represented 43.4% of the total applications for first home mortgages, while among January and May 2023 this value has reached 51,3%.
“If the government does not extend the validity of the subsidy for young borrowers again, we will have to wait to understand how the credit institutions will behave – say gthe experts of Facile.it – The loss of this opportunity would be worrying and it would be the kids who would suffer, especially in such a delicate economic phase. In fact, the tool was very important for the under 36s as it gave them concrete and greater opportunities to buy a house, consequently also supporting the real estate market».
New increases on mortgage payments
Meanwhile, the new rate hike implemented in mid-June by the European Central Bank by 25 basis points brought the reference rate to 4%, the rate on bank deposits with the ECB (Euribor) to 3.50% and that for lending facilities at 4.25%. The result was a rate increase of mortgages which brought thetotal increase of almost +275 euros compared to the beginning of last year (+60%). Moreover, a new increase is already expected in July and therefore, according to market expectations, the peak of the Euribor will be reached next September.
To analyze the costs of the loan, Facile.it examined a variable-rate loan of 126 thousand euros with a 25-year repayment plan signed in January 2022. Therefore, considering a tasso starting in January 2022 equal to 0.67%, corresponding to a monthly installment of 456 euros, following the decisions of the ECB, the same at the beginning of June 2023 reached 4.67% carrying the rata of the same loan at 713 euros. The installment, with the further increase of 0.25% in mid-June, has reached 731 euros, 60% more than the initial one.
Euribor peak in September
Looking at market expectations experts predict that the 3-month Euribor will reach its peak in September 2023 reaching 3.84%. If these forecasts were correct, the rate of the average mortgage examined would be close to 5.10%, with a installment of about 743 eurosor more than 285 euros more than that of January 2022.
After September thoughalways according to expectations, the interest rate trend should reverse e start to decline so much so that the quotations for June 2024 estimate the 3-month Euribor at around 3.42%.