from subrogation to renegotiation -

from subrogation to renegotiation -

Extend the duration of the contract to lighten the installment? the question that many borrowers are asking today. It applies first of all to those who have subscribed to the variable and now find themselves dealing with a much higher cost, but also to some who have opted for the fixed, but are struggling to make ends meet in the light of the numerous increases in the price of goods due to inflation.

The spread between rates is widening

According to the latest Observatory, in June the differential between the benchmarks for the construction of the fixed and floating rate widened further, to the advantage of the former. The 3-month Euribor rose to 3.54% and the 1-month Euribor to 3.34%, while the 10-year IRS essentially remained unchanged at 3.03%, with 20- and 30-year maturities even dropped to 2.90% and 2.63%, respectively. These trends make the fixed rate option even more convenient than in the past, characterized by an average Tan of 3.76%, substantially in line with the best variable. As a result, applications for fixed-rate mortgages are growing significantly, reaching over 91% of the total, with an increase of over 9% compared to the first three months of 2023. Conversely, the requests for variable rate mortgages, with mixed and variable rates with a cap well below one percentage point each.

Requests for subrogation are growing again, but beware of fair compensation

As for the purposes of mortgages, requests in the second quarter of 2023 are still dominated by first home mortgages, which amount to 58% of the total, while second homes stop at just under 6% and renovations at just over 3%. . Consolidation stops at 1.5%, while subrogations gain almost three points, reaching 31.3%. The latter are back to growth after the last increase decided by the ECB and above all in the light of the position taken by the governor Christine Lagarde, who has made it known that she wants to continue with the increases given that inflation remains well above 2%, which the objective - in terms of the statute - of the ECB. If on the one hand the requests are increasing, on the other hand the law on fair compensation could instead have a negative effect on the market for substitutes; in fact, notary costs are increasing (already in some provinces) to the detriment of credit institutions (all the expenses connected with the subrogation are borne by the banks) which will no longer be able to enjoy market prices, but will have to adapt to high tariffs, thus losing the interest in offering this type of product. hopes that this will not happen in order to safeguard consumers' ability to always find better loan conditions.

Durations and amounts without major variations

The average duration of the mortgage remains around 24 years, where it has stood since the end of 2021. Which is partly surprising, considering that in this period house prices have grown and the amount of mortgages even more due to the rise in taxi. Evidently a limit level has been reached between the sustainability of the loan and the age of the applicants. While, as regards the average amount, there is a small increase between the first and second quarters (+0.4%), it is premature to speak of a trend reversal, given that the rebound came after four consecutive quarters of decline.

The options to go through when the installment becomes unsustainable

According to data released by Fabi (the main banking union), unpaid mortgages by Italian households have reached 6.8 billion euros, in a scenario that has essentially seen market rates double compared to spring 2022, when official rates were at zero. While the Government announces that it is working to lengthen the installments of those with variable rate mortgages (in the words of Minister Matteo Salvini), what to do in the current state of the law? Extending the term of the mortgage offers short-term help for families, with an increase in the total cost of the mortgage. There are two zero-cost alternatives: renegotiation with your bank and subrogation. According to, in fact, the hypothesis of introducing the obligation for banks to negotiate the extension of the duration of variable-rate mortgages risks being a short-term solution that brings limited relief to families with a low-interest mortgage variable, but no relief to the mortgage market so the government needs to do more.

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