The ECB's interest rate hike is putting the real estate market in a critical state.

Expensive mortgages are changing the spending plans of Italian families who are postponing the purchase of a house. This follows a study by the Autonomous Federation of Italian Banks (Fabi) on the increase in interest rates and their impact on mortgages, which highlights a drop from 50% to 41% in the proportion of people taking out loans to buy property.

According to Fabi's data, the surge in the cost of money, which increased to 4.5% from the ECB, led to a tripling of the rates applied by banks to mortgage loans issued to families. By the end of last December, the average rates applied to mortgage loans reached 4.40%, which is three times higher than the 1.45% recorded in January 2022, the lowest level in recent years. This 295% rapid increase over just 24 months resulted in a decline in the volume of mortgage loans, especially during 2023, by 2.3 billion euros (an average of 192 million euros per month) after an increase of more than 35 billion euros recorded in the previous two years.

In order to revive the real estate market, "it will be fundamentally important for the European Central Bank to accelerate the start of the process of lowering the cost of money. The easing of monetary policy, which is already expected by most observers, is necessary to enable banks to support the real estate market again as soon as possible.

The impact of expensive mortgage loans on the real estate market is clearly visible from the data of the third quarter of 2023, which confirmed a sharp decline in residential real estate transactions in our country, starting from the fourth quarter of 2022 after a continuous growth that began in 2020. The reduction recorded in the first nine months of 2023 affected all regions and every type of housing. The number of transactions by the end of September 2023 was 507,879, compared to 576,115 for the same period in 2022, marking a decrease of 11.8%. Individuals accounted for about 95% of real estate buyers: of these, 62% took advantage of benefits for first-time homebuyers (which is lower than 65.3% for the same period in 2022 and 68.4% in 2021).