Interest rates on home loans continue to rise. In two years the cost of money has more than doubled and there are no signs of a decline on the horizon. The dynamic is international, but it is also having a heavy impact on the budgets of Sardinian families who, due to the increases, have put the brakes on the purchase of properties.
The effects of the high mortgage prices on the island are written in the November report with which the Italian Central Bank updated the trends of the regional economy , also identifying temporally the negative trend in access to credit to buy a house.
The cost of money began to rise across Europe starting from the second half of 2021, when the European Central Bank increased rates to control inflation. Before then, interest hovered around 1 percent, which made borrowing from banks profitable. Accounts in hand, even in the case of a thirty-year mortgage, the sum to be repaid was almost identical to that requested on loan. It was the so-called “free money” phenomenon.
In December 2021, the definitive turnaround: the year ended with the Taeg, or the total cost of the loan, at 1.92 basis points. Twelve months later, in December 2022, the same value reached 3.46 percent, equal to a further increase of 1.54 percent.
The surge continued unstoppable even in the first quarter of 2023: in March the APR on home mortgages stood at 4.16. It meant a +2.24 points in fifteen months. And that's not all: the latest survey of June 2023, again contained in the Bank of Italy report, brought with it yet another adjustment, albeit minimal: APR for the first half of the year at 4.23 percent, which corresponds to +0.07 since March, while in the medium term the surge was 2.31 percent.
Obviously, the problem is all for families who have to pay a variable rate mortgage every month, which has been very convenient since 2010 and for the following ten years, when the ECB lowered interest rates and then kept them constant over time. The "free money" arrived after the great American subprime mortgage crisis, a recession that did not take long to make itself felt in Europe and to which the ECB responded by printing money and therefore circulating much more money.
