The COVID-19 pandemic in Italy has undoubtedly had consequences for the real estate market, however for the moment, it's not blocking mortgage applications in the country. The latest CRIF (the Italian Credit Union) report says that in June the demand for home loans and subrogation has returned to positive figures, with a 13.3% increase compared to the corresponding period of 2019.
Mortgages in Italy in June 2020
In June 2020, after months of deadlock in the Italian housing and financial services market, the dynamics of new mortgage requests, as well as subrogations and replacements, have resumed thanks to low rates and advantageous conditions.
The average amount also increased, amounting to 133,071 euros with an increase of 2.4% compared to the same month in 2019. With regard to the distribution of applications by amount, the preferences of Italian residents were mainly concentrated in the range between 100,001 euros and 150,000 euros, accounting for 29.9% of the total.
On the other hand, as regards the distribution of mortgage loans by duration, a total of 75% of the applications provide for a repayment schedule of more than 15 years.
Mortgage data in the first quarter of 2020
The figures mentioned above are consistent with a report released by the Bank of Italy at the end of June, which stated that mortgage loans grew by 10.1% in the first quarter compared to the same period in 2019, to 12.345 billion euros. In detail, the figures for mortgage disbursements in Italy reveal that replacement and subrogation operations grew by 97.4% and those supporting a property purchase fell by -0.8%. Almost one fifth of mortgages disbursed (19.8%) is represented by a replacement or subrogation operation.
Forecasts for mortgages in Italy in 2020
"The explanation," according to Renato Landoni, president of Kiron Partner, "lies in the great growth that the subrogation operations have had in the quarter analysed. In the wake of what already happened in the previous quarter (at the end of 2019), many borrowers have decided to take advantage of the extraordinary momentum of low interest rates to improve the economic conditions of their existing mortgage."
Landoni continues by stating that, "The opening figure for 2020 gives us back the awareness of a solid and well-structured pre-lockdown market driven by subrogation, but also with a purchasing market that has been able to hold its own. We will have to wait for the data of the next quarter, to have more certain signals about the real impact of the health emergency faced in recent months."
Landoni does however cautiously acknowledge that the situation appears positive to begin with: "Positive signs are not lacking: the market closed in 2019 with almost 49 billion, a strong recovery compared to the first months of the year and this was maintained in the first quarter of 2020 despite 20 days of lockdown in Italy. Rates will remain at a minimum for a long time and the European institutions have expressed support and in favour of mutualism in dealing with the consequences of the pandemic. Moreover, the first signs regarding new loan applications are favourable. The rest will depend very much on the economic policies that Italy will adopt in terms of supporting the economy, especially in terms of supporting employment and household income".