Fabi: few benefits for households and businesses yet from rate cut

The analysis by Fabi - Federazione autonoma bancari italiani - takes a snapshot of the mortgage market situation in Italy in the context of the expansive monetary policy adopted by the ECB from 2023. The European Central Bank has made eight consecutive interest rate cuts, bringing the official rate from 4.5 per cent to 2 per cent to date. "The rate cut by the ECB is an important, strong and expected signal, but now we need a change of pace and a shared effort, also on the part of the banks, to bring more benefits to customers," comments Fabi secretary general Lando Maria Sileoni. The transmission of these cuts to the real economy has not, as yet, translated into significant benefits for households and businesses.

Total outstanding mortgages granted to Italian households reached EUR 380.1 billion, growing by just EUR 3.7 billion between 2022 and 2024 (+1%). Loans to households between May 2024 and March 2025 increased by almost EUR 8 billion, or +1.9%. The market is heavily concentrated in a few large cities: Rome and Milan alone account for almost 23% of the national total, with over EUR 86.9 billion in active mortgages. They are followed by Naples, Turin, Bologna and Florence. The top ten Italian cities total almost 140 billion, i.e. over a third of the national market. Despite the fall in the ECB rate, the average Taeg (annual percentage rate of charge) on mortgages went from 4.72% (October 2023) to 3.54% (March 2025), a reduction of only 118 basis points. This narrow gap shows that the reduction in the cost of money has not yet translated into a significant benefit for households and businesses. In addition, a rapprochement between fixed and variable rates can be observed, while the cost of fixed mortgages has shown signs of rising slightly in the first months of 2025, curbing the affordability of new loans.

The mortgage market showed very differentiated territorial trends: the regions with the greatest growth were Sardinia (+3.3%), Apulia (+3%), Emilia-Romagna (+2.1%), Veneto (+1.8%) and Campania (+1.4%). In absolute values, Lombardy recorded the largest increase (+1.4 billion), driven by Milan. Declining regions include Liguria (-3.5%), Molise (-2.8%), Valle d'Aosta (-2.5%), Calabria (-1.8%) and Piedmont (-1.5%). This geography of credit highlights a sort of 'two-speed Italy', where large urban areas and some southern regions are more dynamic, while the North West and other peripheral areas struggle to keep up.

There are about 6.9 million Italian households in debt, or 25% of the total, and among these 3.5 million have a home mortgage. Variable-rate mortgages account for about one third of the total disbursed (125 billion), while the remainder are fixed-rate (255 billion). Households with variable-rate mortgages were the hardest hit by the rate hike between 2022 and 2023, with instalment increases of up to 70-80%. Fabi Secretary General Lando Maria Sileoni stressed that cutting rates alone is not enough. Coordinated political action is needed to: really reduce bank rates; broaden the criteria for access to credit; support fragile families, young people, precarious workers and small businesses; make credit an instrument of development, economic justice and social trust.