Mortgages and new trends: greater flexibility on instalments, interest rates and loan terms

Once upon a time, it was a case of ‘take it or leave it’: take out a mortgage on certain terms, or no loan at all. Then, in 2006, came the ‘blanket measures’ introduced by the then Minister Bersani, which introduced the option of mortgage subrogation. As a result, many customers were able to leave their bank and switch to one offering better terms. Last but not least, there was the joint Bank of Italy–IVASS document aimed at curbing the phenomenon of ‘decorrelated’ insurance policies – that is, those with no functional link to the mortgage. That was in 2020.

So what now? There has been a resurgence of undue commercial pressure, with some banks pushing for customers to take out policies. Insurance policies are being sold in droves, often without properly assessing customers’ actual needs, as trade unions and consumer organisations point out. The budget comes first.

However, there are also some new trends – at least when it comes to home loans – which are worth highlighting. The emerging trend is ‘sharing the benefits’: some banks ask you to take out a policy, usually the standard CPI (Credit Protection Insurance), which is optional insurance designed to guarantee repayment of the debt in the event of unforeseen circumstances; in return, however, the spread is reduced or greater flexibility is allowed with regard to repayments. “That’s exactly right,” notes Roberto Anedda, head of market analysis and public relations at Credipass. Some credit institutions have introduced a great deal of flexibility into their mortgages. As well as lowering spreads, in some cases they allow payments to be suspended, even on multiple occasions. Furthermore, there is the option to change the type of interest rate, switching from fixed to variable or vice versa, as well as extending the term of the mortgage.’ This marks a significant shift in perspective. “Among other things,” adds Anedda, “the disposable income available for mortgages has fallen. The term now almost always ranges between 25 and 30 years. Loans with terms of 15–20 years are rare.” There is therefore a need for banks to meet their customers’ needs.

What, then, is the situation regarding insurance policies linked to mortgages? Has the pressure from banks to have customers take out such products alongside other loans increased? “We have very limited insight into the taking out of these policies,” says Guido Bertolino, head of business development at Mutui Supermarket. What is certain is that, through mortgages, banks engage in cross-selling, offering, for example, the opening of current accounts.” And on the insurance front, he adds: “Banks sometimes offer a range of mortgage discounts in exchange for taking out insurance policies. Credit Agricole, for example, reduces the spread by 0.50 per cent if a CPI Vita policy is taken out. Bper, on the other hand, in the case of a ‘brown’ mortgage – i.e. where the property’s energy rating is below A or B – grants access to the same benefits provided for ‘green’ mortgages if a CPI policy is taken out, with a 0.20% reduction in the interest rate’.