Italy unable to pay the mortgage: 15 billion in arrears. A million families in trouble
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MILAN. The total of unpaid installments by Italian families who have a mortgage or loan almost reaches 15 billion euros. In the last period, the increase in the cost of money by the ECB, the increase in interest rates and the run of inflation have reduced disposable income and have made it difficult for bank customers to meet loan deadlines. Today there are about a million families who are behind with repayments. They are particularly in difficulty with mortgages, especially those at variable rates (one third of the total), which often represent a significant portion of the monthly budget. Meanwhile, concern is already about the next meeting in July of the ECB and about another rate hike to 4.25%.
In more detail, household impaired loans reached 14.9 billion last March: 6.8 billion of unpaid mortgages, 3.7 billion of unpaid consumer credit and 4.3 billion billion related to arrears of other personal loans. Of the total of 14.9 billion, 5.7 are non-performing loans, i.e. loans that customers will no longer repay, another 7.1 billion are probable defaults, i.e. money that banks realistically will not recover, while around 2 billion are overdue installments , therefore less risky debt positions.
Mortgages, the plan for variable rates: longer maturities and secured installments. The government proposal and the obstacles in the bank
sandra hedgehog
The difficulties of households mainly concern variable rate mortgages, particularly affected by the increase in the cost of money brought from 0 to 4% in 11 months: this category of real estate loans is worth a total of around 140 billion and represents a third of the total of 425 billion disbursed.
At the territorial level, at the top of this particular ranking, there are Lombardy and Lazio with an amount of unpaid installments over 2 billion. Campania, Puglia and Basilicata, Sicily and Veneto exceed one billion. Emilia Romagna, Piedmont and Valle D’Aosta, and Tuscany remain just under one billion. The value of the unpaid sums is more contained in the smaller regions such as Umbria where the unpaid installments amount to 226 million, Liguria (361 million) and Calabria (418 million).
The analysis of the total impaired loans of banks attributable to households, the result of Fabi calculations on Bank of Italy statistics, allows us to photograph a difficult situation in the country. In fact, there are almost one million Italian families, squeezed between the grip of interest rates and the race of inflation, in arrears with the maturities relating to bank loans. Last March, the mass of deteriorated debts reached 14.9 billion: 5.7 billion correspond to bad debts (customers who will no longer pay), 7.1 billion are unlikely to pay (credit that could become bad debts), about 2 billion are overdue installments (less risky positions). In more detail, 6.8 billion correspond to mortgage loans for the purchase of homes and are made up as follows: 2.7 billion in non-performing loans, 3.4 billion in probable defaults, 621 million in overdue installments. A further 3.7 billion refer to consumer credit: 1.2 billion in non-performing loans, 1.4 billion in probable defaults, 1 billion in overdue installments. Other loans (such as personal ones, requested without a specific purpose) generated 4.3 billion in non-performing loans: 1.7 billion in non-performing loans, 2.2 billion in probable defaults, 339 million in overdue installments.
The weight of inflation
The rise in interest rates makes mortgage installments soar: how to move with loans and who is better off subrogation
Sandra Riccio
At the end of April 2023, the total value of mortgages for the purchase of homes amounted to 425.5 billion euro, up by around 50 billion compared to the end of 2017 (+13.4%). About a third of the total, i.e. 140 billion, refers to variable rate mortgages. Out of a total of 25.7 million Italian families, those who have a mortgage are around 3.5 million, out of a total of 6.8 million citizens who are also indebted with other forms of financing, such as consumer credit and personal loans. Between consumer credit and personal loans, banks granted 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 of interest rates.
«It is now evident that the action of the European Central Bank to combat inflation is not generating the desired results. Prices are not falling significantly and the rapid increase in the cost of money is causing a rise in interest rates on loans and mortgages which is putting both households and businesses in difficulty. The ECB has already announced that it will bring the base rate to 4.25% on 27 July – declares the general secretary of the Fabi, Lando Maria Sileoni -. We hope for a rethink and, in any case, we hope that all future decisions will be taken with greater caution by the European Central Bank. As for the initiatives of the banks to give breathing space to families, it must be clearly stated that any decision must be taken without anxiety and only after an adequate evaluation. In order to receive the right advice and to be oriented towards making informed choices, the competence and professionalism of all bank workers must also be exploited, many of whom personally face problems identical to those of customers. In particular, it must be said that the mortgage spreader is not risk-free nor is it a zero-cost operation. The lengthening of the repayment plan of a variable rate mortgage, in fact, entails a greater amount of interest to be paid to the bank in addition to the fact that the possibility of being able to benefit, in the medium-long term, from a desirable reduction is jeopardized of interest rates”.
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