Rome, 15 March 2024 – Even if the grip of inflation seems to have loosened its grip slightly, the exposure of Italian families to greater financial fragility continues. Consumption returns above pre-Covid levels (+2% consumption expenditure in Q3 2023 vs Q3 2022), but the decline in disposable income negatively affects the family spending budget and in particular on the way in which sums are spent available.
The ECB’s monetary policy remains oriented towards prudence and there is no mention, at least in the immediate future, of a rapid and substantial reduction in the cost of money. In the two-year period 2022-2023, the 95 billion in mortgages disbursed, including new ones and subrogations, at higher rates than in the recent past almost doubled the average rate of outstanding amounts, exceeding 3%. An effect that was accentuated by the share of variable rate mortgages, which recorded a peak between September 2022 and February 2023.
This situation has led many families to have problems with managing the mortgage payment and, where present, with other debt positions. The survey conducted on Italian families highlights how among the 50% of adult Italians with at least one loan in progress, one in four fears that in 2024 they may have difficulty regularly repaying the installments. This is the photograph taken from the first 2024 edition of the Save Your Home SalvaLaTuaCasa Observatory, created by Nomisma.
The Observatory of the Benefit Society Save Your Home divides Italian families into 4 clusters: solid families, resilient families, those in the balance and insolvent ones. The survey shows how families in the balance and insolvent ones, which represent a total of 16% of the families analysed, are those who find themselves in a most critical position. In fact, the survey shows that, among families in the balance, 46% declare that they have an ongoing loan aimed at purchasing a good or service (for insolvent families it is equal to 44%), or a loan linked to a need for liquidity without a predetermined purpose (30% of families in the balance and 20% of insolvent families), or payment in installments via revolving card or “Buy Now Pay Later” deferral (25% of families in the balance and 43% of insolvent families ).
The Observatory also notes that at the end of 2023, due to the prolonged increase in interest rates, the number of families who have to pay a higher installment will increase. In fact, the incidence of families with a monthly installment (between mortgage and consumer credit) exceeding 700 euros has gone from 27% to 40%. But the most marked and alarming dynamics are those linked to the increases in installments of variable rate mortgages, which overall represent around 40% of the stock of mortgages currently being repaid by families. The violent rise in the cost of money in less than two years has generated increases for this group of families, which the Observatory estimates at between 35% and 119% of the monthly payment, with a consequent contraction of the residual net income available until 51%. This increase in the burden of installments mostly affects Italians with a variable rate mortgage and a gross annual income of up to 40 thousand euros (a range that includes 90% of taxpayers), with a significant impact on the residual disposable income which, in many cases, it even reaches below the minimum subsistence threshold. The potential criticality is destined to remain even in the medium term, as the prospects for a future reduction in the cost of money are gradual and diluted over time. Added to this is a generalized increase in other expenses that affect the priority aspects of life: from healthcare to education, to food and household utilities. A situation that inevitably determines an increasingly evident polarization of wealth. Although the household default rate has remained at low levels overall compared to the minimum level recorded in the last five years of observation, in the absence of effective solutions for the most fragile subjects, the still high rates may impact on credit quality. Historically, the increase in the 3-month Euribor rate translates into an increase in non-performing loans with a time lag of 12 – 18 months.
Consequently, the significant increase in the Euribor rate raises concerns if it is not accompanied by effective support interventions. Without adequate countermeasures, a deterioration in credit quality is expected in the coming months, with a consequent increase in insolvencies. This situation will probably also be reflected in the auction market, estimated for 2024 between 160 thousand and 180 thousand (+12 % compared to 2023).
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2024-03-21 08:58:30