how credit changes in Italy – Corriere.it

Mortgage installments are still rising, current account payments are struggling to take off. According to Bank of Italy surveys, in April interest on loans for the purchase of homes reached 4.52%. They were at 2.2% just a year ago, before the ECB proceeded with seven rate hikes to bring inflation under control. The doubling of the cost of loans to households is affecting the housing market: sales decreased by 8.7% in the first quarter and almost one real estate agency out of three reports difficulties in obtaining bank credit from potential buyers.

In the face of growing economic uncertainty, moreover, institutions have become more cautious in granting loans. According to Bank of Italy statistics Banks and money, in April loans to the private sector decreased by 0.5% compared to the same month in 2022. The result above all of the reduction in loans to businesses (-1.9%) , dropped for the third straight month. It is not clear whether the drop is due to the reduction in demand from companies – frightened by rates that average 4.52% – or to the prudence of banks – worried about a possible surge in non-performing loans which have increased by one billion since December.

For the moment, however, the ECB’s monetary tightening has proved beneficial for Italian institutions, which have returned to earnings in their accounts and on the stock market after the long era of zero interest rates. The sudden rise in the cost of money was in fact rapidly transmitted to loan conditions, but not to funding. The average remuneration paid by banks to depositors stood at 0.64% in April, up slightly from 0.60% in March. In the difference between the interest requested from debtors and those paid to customers, the banks prospered, realizing 9.2 billion in intermediation margin and 5.3 billion in net profits in the January-March period. How long can the golden age last?

The political and monetary authorities are insisting that the banks also transfer the increase in interest rates to current accounts, whose rate stood at 0.29% in April. ECB President Christine Lagarde recently stressed that the central bank would like banks to fully pass on monetary policy. Not only with regard to the credit they provide to households and businesses but also on the deposits they receive from households and businesses. All deposits. A request that Italian institutions have so far rejected, arguing that current accounts are a service and not an investment and as such cannot offer returns. The position could only change in the face of a flight of money from current accounts to more profitable jobs. In April, deposits fell by 3.4%, a figure that is probably insufficient to reverse the trend. Will the 18.2 billion BTP Valore boom inflows be the keystone?