Mortgage rates on the rise
How to get the best conditions
For a year now, we have been witnessing an increase in mortgage rates that is somewhat discouraging those who were about to take one of the most important steps in their lives: buying a home for themselves and their family.
Today let’s find out together how much is true behind this trend, triggered mainly by the generalist media, and how much is the result of an incorrect or otherwise biased interpretation of events.
The word from the expert
To do this, we decided to turn to an expert in the field of the credit mediation, the Dr. Stefano Grassi, founder of Entrust* and partner of Tuscania Real Estate on credit counseling, who told us what will be, in his experience, the trend on rates in the near future.
“Mortgages at the moment are actually at “normal” levels … the anomaly was vice versa when they were at 0% or even negative. It is true that rates have been rising for the past year, but the peculiarity is the speed with which they are doing so, rather than their absolute value.
We are now up to 4.25 percent, a value that will probably increase by 0.25 percent before stopping anytime soon, surely reaching 4.50 percent by the end of the year, as announced by Lagarde.
The idea that as of today buying a home through a mortgage is no longer possible because of rate hikes is actually a problem of “perception,” in the sense that we have gone from an unrealistic and certainly temporary situation, with rates at a derisory level, to a normal, albeit troublesome one.
To repeat, it was not the absolute high values as much as the speed with which they rose that generated concern and alarm among households and businesses.
What is missing in many cases in the consumer is the idea of availing themselves of professionals in credit mediation who, in addition to obtaining the best conditions thanks to agreements with banks, know how to explain the situation in a simple and clear way so as to reassure about the normality and sustainability, in the long term such as that of a mortgage, of the situation.
Some were also concerned about this statistic: banks disbursed fewer mortgages during the year than in the previous year.
What was perceived by consumers regarding this figure was a reluctance of lenders to provide mortgages,adding to the psychological difficulty and disincentive to those who had decided to buy homes.
In reality, this figure is a mere consequence of people’s distrust of the current situation and thus the decreased demand for mortgage lending, coupled with a clearly more unfavorable installment-to-income ratio.
I believe, in spite of this, that buying a home at the time of writing is still a right choice, partly because in parallel average rental prices have increased, and buying a property, in addition to providing stability for the future, is also a good decision in case you decide to invest in renting.
In any case, I believe that the ECB should decrease rates in 2024 to stand at up to 3 percent, which, again, would not be a normal rate level but rather would be a low level.
“
Stefano Grassi, founder of
Entrust
*Affida is a leading credit brokerage firm and partner of Investcorp.
Founded by Lucchese Stefano Grassi, in the first quarter of 2023 it exceeded 430 staff members and 40 employees located throughout the country and in more than 125 agencies and operational headquarters in Lucca.
