(Finance) – The progressive interest rate hike by the ECB will impact the real estate market and on that creditdue to the increase in the cost of mortgages, but also on the consumption of durable goods, such as a car or a washing machine, which become less convenient due to the increase in interest rates applied on loans and consumer credit disbursements. The price increases are fully visible and are already producing repercussions on families. A report from the FABIthe banking union, which takes stock of the recent decisions of the ECB.
How many debtors are there?
Out of the total of 25.7 million households Italian, those that have a mutual are approximately 3.5 millionbut if we also consider personal loans and consumer credit, households indebted are 6.8 millionequal to 25% of the total.
The total value of the loans for the purchase of homes amounted, at the end of March 2023, to 425.5 billion eurosan increase of around 50 billion compared to the end of 2017 (+13.4%).
Between consumer credit and personal loansthe banks have disbursed 251.2 billion euros of loans to citizens, in line with the values at the end of 2017, but slowing down compared to the trend of recent months, a sign of the negative impact of the increase in interest rates.
The interest rate trend
For fixed rate mortgagesthe installments of those contracted up to the beginning of 2022 will not change until the end of the repayment plan, but the new fixed-rate mortgages have gone from a average interest by about 1.8% too over 5%, with monthly installments which may result, on the basis of the offers of the banks, too more than doubled. For example, for a fixed rate mortgage of 200,000 euros over 25 years, the average rate applied by banks could be higher than 6% and the monthly installment equal to 1,304 euros, while for a 100,000 euro 25-year loan, with the rate at 5.3%, the monthly installment will be 609 euros.
For variable rate mortgages, the monthly “repayment” is destined to rise by 55-65%. The installments of old mortgages I am already increased by an average of 75%, it means that those who used to pay an installment of around 500 euros a month are paying today 875 euros (375 euros more), And it is very probable that the installments of the old variable rate mortgages could go up again. Also new mortgages variable rate could arrive, shortly, around 6% from 0.6% at the end of 2021: this means that for a 150,000 euro loan with a duration of 20 years, the monthly payment will be 1,090 euros, a good 325 euros more (+63.9%) compared to what would have been obtained a year ago or 665 euros.
Credit disbursements
The cost also goes up the purchase of cars or other durable goods “in installments”. If at the end of 2021 the average interest rate was 8.1%, in light of the increases practiced by the ECB, the rate could reach 13.3%.
This means, to buy a 25,000 euro car entirely in installments, with a loan from 10 yearsthe total cost goes from 37,426 euros to 46,626 euros, with a difference total of 9,200 euros (+24.6%) compared to end-2021 rates.
To buy one washing machine from 750 euros entirely in installments, with a 5-year loan, the total cost goes from 942 euros to 1,074 euros, with a difference total of 132 euros (+28.1%) compared to end-2021 rates.