Falling rates, more favorable conditions for access to credit

In March 2024 the experts of Kiron Partner (Tecnocasa Group) analyzing the Bank of Italy data, record that “interest rates on loans disbursed to families for the purchase of homes stood at 4.21% (including all ancillary costs and represented by the Global Effective Annual Rate APR)”.

Falling rates

On a monthly basis “i interest rates show a decline compared to 4.31% in February. This is an important and interesting index for those who are considering the opportunity to access the real estate market and reflects a trend towards more favorable interest rates compared to those proposed in the past months”.

The demand for home loans – he states Renato Landoni, President of Kìron Partner – is constantly increasing and the reduction in interest rates that has been underway for a few months now represents a good opportunity for families. It is likely that the ECB will intervene again in the coming months by further reducing the reference rates, giving further impetus to those who take out a loan to complete the property purchase”.

more favorable conditions for access to credit

Regarding the typology of mutual, Kìron's internal data referring to the first quarter of 2024 “show a clear preference among Italians towards the fixed rate, which is close to 94%, causing variable rate mortgages to drop to 2.5%. A completely different scenario compared to the first months of 2023 when fixed rate mortgages represented 63%”.

Villeroy does not rule out second rate cut

Meanwhile, the ECB's cut in June now seems certain. But another could come. “Unless there are surprises, the first interest rate cut in June is a done dealbut after that we have several degrees of freedom. There are different opinions in the ECB Council on how quickly the second interest rate cut should follow.” He stated it Francois Villeroy de Galhaugovernor of the Bank of France and member of the Governing Council of the ECB, in an interview with Boersen-Zeitung.

“Sometimes I read that we should only cut interest rates once a year quarter, when the new ECB forecasts are available, and therefore exclude July”, explained the central banker, underlining that he did not appreciate this approach very much: “I'm not saying that we should commit ourselves until July, but we should maintain our freedom regarding timing and rhythm“.

That's when

Overall, as things currently stand, he believes that the market's expectations regarding the ECB's future monetary policy are “not unreasonable”. Financial markets are currently pricing in two or three interest rate cuts of 25 basis points for 2024.