Home loans, French-style amortisation 'acquitted' with full formula

French anatocism 'acquitted' with full formula. No hidden and prohibited form of anatocism (the calculation of interest on interest) is hidden in home mortgages (both fixed-rate and variable-rate) - which are widespread in Italy. This was most recently established by Order 8322 of 29 March 2025 of the Supreme Court. But let us reconstruct the case.

In recent years, we have witnessed a fairly rare phenomenon: a real disagreement between mathematicians over the plan for mortgages with French-style amortisation or decreasing interest rates. Although it is said that mathematics is not an opinion, on the one hand there are scholars and technicians - including the Amases (Association of Applied Mathematics in Economic and Social Sciences) - who, in line with the absolute majority case law, rule out the presence of anatocism implicit in French-style amortisation. On the other hand, a small group of 'dissident' mathematicians argues the opposite and has found some support in a minority orientation of the case law.

Attempting to shed light on the matter, last year the Supreme Court of Cassation in Joint Sections intervened with ruling No. 15130 of 29 May 2024 (see 'Il Sole-24 Ore' of 23 October 2024), which excluded compounding in fixed-rate loans with French-style amortisation. The Court also clarified that the failure to indicate the amortisation schedule and the compounding regime of debit interest does not entail the nullity of the contract, neither for vagueness of the object nor for violation of the regulations on contractual transparency. The ruling, however, raised the question of whether it only applied to fixed-rate mortgages.

To dispel this doubt too, the Supreme Court intervened again with its Order No. 7382 of 19 March 2025 (see "Il Sole-24 Ore" of 29 March 2025), stating that the principles expressed by the Joint Sections also apply to floating-rate mortgages. Also in this case, in fact, there is no anatocism, since the interest portion of each instalment is calculated only on the residual capital of the previous period. Finally, as mentioned, on 29 March, the Supreme Court reiterated the concept: French-style amortisation does not conceal anatocism, neither at fixed nor at floating rates.

It is unlikely that the legal position of the Supreme Court will convince the 'dissident' mathematicians, but it is realistic to think that - barring unforeseen twists and turns - the jurisprudential orientation against the presence of anatocism in French-style amortisation will be definitively consolidated.