Since October 2023, market rates have decreased and in the most recent weeks “this decreasing trend has continued following the reductions in ECB rates and also anticipating further decisions by the European Central Bank”, so the average rate on new operations for house purchase decreased to 3.28%, compared to 3.31% in September 2024 and down compared to 4.42% in December 2023. This is highlighted by the monthly Abi report.
Another significant element, underlined by the deputy general director of the Abi Giancarlo Torriero, is the decrease of one percentage point also in the average rate on new business financing operations, from 5.45% in December 2023 to 4.60% in October . Between September and October, in particular, a decrease of 0.30 percent was recorded.
Rates on bank funding are also decreasing: the rate applied on new fixed-term deposits (i.e. certificates of deposit and time deposits) in October 2024 was 3.14% while in September it was 3.35%, higher than the average of the euro area (3.17%). The yield on new issues of fixed rate bank bonds in October 2024 was 3.83%.
Current accounts yield very little, the rate is 0.48% (0.52% in the previous month; 0.02% in June 2022) but the Abi reminds “that it does not have the investment function but rather an enabling platform ‘, a liquidity reserve to manage payments”.
The Abi also analyzes market rates. In the first 14 days of November the 3-month Euribor rate averaged 3.04% (3.17% was the average in October), a decrease of 13 basis points compared to October 2024. The decrease was 96 basis points compared to the maximum value recorded in October 2023. The six-month BOT rate was on average 2.95% (2.99% in October); the 10-year IRS rate (widely used in mortgages) was on average 2.39% (2.43% in October); the 10-year BTP rate averaged 3.66% (3.51% in October).
In October, loans to businesses and families “fell by 2.0% compared to a year earlier”, according to what emerges from the monthly Abi report which recalls how in September 2024 loans to businesses had decreased by 2.4% and those to families by 0.4 percent. The decline in credit volumes “is a consequence of the slowdown in economic growth which contributes to depressing the demand for loans” underlines the report.
The Curious Case of Decreasing Rates: A Comedic Deep Dive
Well, well, well, here we are—October 2023 and it seems the only thing dropping faster than my hopes for a Saturday night date is the market rates! Who would’ve thought that reductions in ECB rates could lead to lower average rates on house purchases, right? I mean, it’s not exactly rocket science, but you get the gist: the average rate on new operations for house purchases has plummeted to 3.28%, down from 3.31% in September 2024. And just as a little dessert to that figure, let’s not forget it was a whopping 4.42% back in December 2023. My goodness, is anyone else feeling a chill or is it just the cooling interest rates?
Now, if you thought that was the extent of the rate rollercoaster, hold onto your hats, because Giancarlo Torriero, the deputy general director of the ABI, came out with another bombshell! The average rate on new business financing has nosedived from 5.45% in December 2023 to 4.60% in October. That’s a whole percentage point! At this rate, I half-expect him to unveil a magic trick next—now you see it, now you don’t—just like my social life.
And speaking of numbers, let’s dip our toes into bank funding rates! The rates applied on new fixed-term deposits are now at 3.14%, down from 3.35%. Clearly, bank rates are dropping faster than a lead balloon, surpassing the euro area average of 3.17% just to add a bit of competitive flair. It’s like the banks are in a race—‘catch me if you can!’ Those fixed-rate bank bonds are yielding a cheeky 3.83% in October! Oh joy, I can almost smell the desperation from here.
Now onto current accounts—what’s that I hear? A measly 0.48% yield? That’s a slight drop from the previous month’s 0.52%. It’s hardly pulling in the crowds, is it? But don’t worry, the ABI is here to remind you that it’s not about the investment function; it’s just your “enabling platform.” Sounds posh, doesn’t it? Just a liquidity reserve to manage your payments—like having a fancy-looking stump in your garden that doesn’t actually grow anything. Cheers for that!
As we turn our attention to the first 14 days of November, the 3-month Euribor rate averaged around 3.04%. That’s a slide of 13 basis points compared to October 2024. It’s like these figures are on a slip-n-slide into “not great, Bob!” territory! And do we even want to talk about the fall in loans to businesses and families? A delightful drop of 2.0% year-on-year—and trust me on this, it’s not because people suddenly invented sleeping bags to live in their childhood homes. The ABI report tells us it’s the slowed economic growth that’s driving down the demand for loans—because who doesn’t love a bit of doom and gloom to spice up their financial reading?
So what do we boil all this down to? Lower rates aren’t just the nerdy wonderland of finance; they’re a reflection of a broader economic trend, one that’s likely tightening the grip on wallets everywhere. But hey, at least now you can buy a house without needing a second mortgage on your sanity! Just remember, every silver lining has a cloud—especially when it’s raining rates!
Since October 2023, market rates have notably decreased, and this downward trend has persisted in recent weeks, propelled by reductions in European Central Bank (ECB) rates and anticipations of forthcoming monetary policy decisions by the ECB. As a result, the average interest rate on new home purchase loans has dropped to 3.28%, down from 3.31% in September 2024 and significantly lower than the 4.42% rate recorded in December 2023. This information is emphasized in the latest monthly report released by the Italian Banking Association (Abi).
Another crucial point highlighted by Abi’s Deputy General Director, Giancarlo Torriero, is the significant decline in the average interest rate for new business financing operations, which has fallen by one percentage point — from 5.45% in December 2023 to 4.60% in October. Particularly noteworthy is the 0.30 percentage point decrease observed between September and October, reflecting a broader trend of easing financial conditions for businesses.
Rates on bank funding are also on a downward trajectory. In October 2024, the rates applied on new fixed-term deposits, including certificates of deposit and time deposits, stood at 3.14%, a decrease from 3.35% in the previous month, yet still surpassing the euro area average of 3.17%. In a related financial context, the yield on new issues of fixed-rate bank bonds reached 3.83% during October 2024.
The yield on current accounts remains low, recorded at just 0.48%, a slight decline from 0.52% in the previous month and a stark contrast to the mere 0.02% observed back in June 2022. The Abi emphasizes that current accounts are not primarily investment vehicles; instead, they serve as essential liquidity reserves that facilitate daily payment management.
The Abi also conducts thorough analyses of market rates. During the first two weeks of November, the three-month Euribor rate averaged 3.04%, reflecting a 13 basis point decrease from the October average of 3.17%. This decline represents a substantial 96 basis point drop from the record high seen in October 2023. For broader context, the six-month BOT rate averaged 2.95% in November, while the ten-year IRS rate, which is frequently utilized for mortgages, averaged 2.39% during the same period.
In October, lending to both businesses and households declined by 2.0% compared to the previous year, as detailed in the monthly Abi report. This decline aligns with the trends noted in September 2024, where loans to businesses fell by 2.4% and those to families decreased by 0.4%. The report underscores that the overall reduction in credit volumes is a direct consequence of a slowdown in economic growth, which has dampened demand for loans across the board.
**Interview with Giancarlo Torriero, Deputy General Director of ABI, on Recent Trends in Market Rates**
**Editor:** Welcome, Giancarlo Torriero! Thank you for joining us today. It’s a significant time for the financial markets, with rates dropping across the board. What can you tell us about the recent decline in average rates for house purchases?
**Giancarlo Torriero:** Thank you for having me! Yes, it’s been quite a shift. Since October 2023, we’ve seen the average rate on new home purchase loans fall to 3.28%, down from 3.31% in September and a notable decrease from 4.42% in December 2023. This decline is largely influenced by the European Central Bank’s recent rate cuts and market anticipations regarding future ECB policy decisions.
**Editor:** It sounds like the ECB’s actions are having a direct impact on borrowing costs. Are we seeing similar trends in business financing rates as well?
**Giancarlo Torriero:** Absolutely. The average rate for new business financing operations has also dropped significantly—from 5.45% in December last year to 4.60% in October. That’s a full percentage point reduction! We witnessed a specific decrease of 0.30% just between September and October, indicating that businesses are enjoying more favorable financing conditions as well.
**Editor:** That’s great news for both individuals and businesses. Moving on to bank funding, we’ve noticed a decrease in rates for fixed-term deposits. What’s the situation there?
**Giancarlo Torriero:** Yes, indeed. The rate on new fixed-term deposits has fallen to 3.14%, compared to 3.35% in September. This is also higher than the average rate in the euro area, which is around 3.17%. It seems that banks are competing to offer better rates to attract deposits.
**Editor:** Speaking of competition, how are current accounts performing in this environment? They seem to yield quite low rates.
**Giancarlo Torriero:** You’re right—the yield on current accounts currently stands at just 0.48%, down from 0.52% the previous month. The ABI reminds us that current accounts serve primarily as liquidity reserves for managing payments rather than as investment vehicles, which is why the yield is lower.
**Editor:** There’s also concern regarding the overall decline in loans to businesses and families. What’s contributing to that?
**Giancarlo Torriero:** Yes, the ABI report highlights that loans to businesses and families fell by 2.0% year-on-year. This decline in credit volumes is primarily a reflection of the slower economic growth we’re experiencing, which is reducing the demand for loans.
**Editor:** It sounds like we have a mixed financial picture: decreasing rates but also a decrease in borrowing. What should we take away from these trends?
**Giancarlo Torriero:** Lower rates indicate a more favorable borrowing environment, which could stimulate economic activity. However, the decline in loans suggests that businesses and consumers are cautious due to broader economic uncertainties. It’s a classic case of balancing encouraging economic conditions with the cautious sentiment in the market.
**Editor:** Thank you, Giancarlo, for shedding light on these trends. It’ll be interesting to see how the market evolves in the coming months!
**Giancarlo Torriero:** My pleasure! I look forward to the developments as well.