Interest rates are falling and mortgage demand is recovering slightly

The first signs of improvement in the dynamics of mortgages to purchase a house are arriving but demand still remains weak. After the contraction caused by the surge in interest rates imposed by the ECB starting from mid-2022 – as a response to the growth in inflation at a global level between the outbreak of the conflict in Ukraine and the post-Covid pandemic recovery – the trend now seems to be gradually reversing steps. Italian companies, on the other hand, still remain cautious, they are very liquid and therefore, in a context of still high rates, they prefer to draw on their own resources, if possible, rather than ask for a loan.

The ABI outlines the picture of the credit dynamics during the annual seminar, which is being held today and tomorrow in Florence, with the conclusions that will be entrusted to the president Antonio Patuelli. For days, the banking world has been at the center of the political debate due to the contribution requested from credit institutions in the 2025 budget, for which specifics are awaited. “Interest rates are decreasing, with reductions expected for the next few months. From the second half of 2023, market rates began to decrease, anticipating the ECB’s decisions which only arrived in the second half of this year”, he notes the deputy general director of the Abi Gianfranco Torriero.

Starting from October 2023, market rates began to decrease, the association notes, anticipating the decisions of the ECB. In more recent weeks the trend has further strengthened. A dynamic that favored the recovery of requests. But the macroeconomic scenario continues to be complex. Italian GDP in 2024, estimates the ABI drawing on various sources, should be between 0.8% and 1%. Torriero underlines that, after a period of contraction, “loans for the purchase of homes have started to grow again, albeit at a limited pace”.

The trend in loans, recalls the Abi manager, is mainly determined by “demand factors”. In a context of economic slowdown and higher market rates than in the past, companies have preferred to use internal resources. “The lack of demand is above all on the investment component. There is no issue of availability of financing, companies have an increase in deposits”. Industrial production is struggling, in August it fell by 3.2%, recording a decline for 19 months. This is why many companies prefer to resort to the liquidity accumulated in recent years.

In addition to the credit dynamics, the banks’ local roots are also changing. “There is talk of reduction, I will not use the other term in vogue (desertification, ed.): today the bank branches in Italy active in June 2024 are over 20 thousand. In past decades, when there was talk of ‘petrified forest’, there were 5 thousand in less”, analyzes Torriero. Which underlines: “The reduction of branches is a phenomenon that affects all European countries. The Italian sector has reduced less than other countries”.

However, the use of remote banking is increasing while visits to branches are decreasing, due to demographic or economic reasons which particularly affect some territories, such as those less densely populated, where services such as pharmacies, post offices or railway stations are also lacking. For 2025, with the progress of the regulations, the ABI predicts a strong increase in the use of instant bank transfers, with institutions called upon to align their cost with ordinary ones. But attention must be paid to using the tool in complete safety against scams. From Patuelli comes an aside on the personal profile of workers in the sector. “There is no aging of the staff – he argued – but greater qualification, a cultural and professional training that responds to the great challenges that exist in our work”.