Mortgages, fall halted in August: rates steady at 3.44%
Slight recovery in deposit growth over the summer, after months of gradual decline
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Key points
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The credit contraction is beginning to slow down. A recovery in the mortgage market is reported to have been underway since August, during which the overall loan volumes of Italian banks (households and businesses) reduced their contraction from minus 2.2 per cent to minus 2 per cent. Already in July, loans to households had reduced the decline to minus 0.6 per cent, so the expectation for August is that the process will slowly begin to reverse. Also in July, loans to businesses contracted by 3.9 per cent. This scenario emerges from ABI's monthly bulletin for August.
In August rates as in July, room for reductions after the ECB
As far as interest rates are concerned, the situation in August seems to be fairly stationary compared to July for the mortgage sector, while signs of reduction are evident in the corporate sector. In fact, the average rate on new business loan transactions decreased to 5.07% compared to 5.27% in July 2024 and 5.45% in December 2023. The average rate on new home purchase transactions stood at 3.44%, stable compared to July 2024 and down from 4.42% in December 202. The average rate on total loans (i.e. taken out over the years) fell to 4.71% from 4.74% in the previous month.
Deposits are also growing again (+2 per cent).
Another factor emerging from the monthly bulletin is a slight pick-up in deposit growth over the summer, after months of gradual decline. Deposits alone, in their various forms, grew by 2.0% year-on-year in August 2024 (+1.3% the previous month) and amounted to 1,786 billion. Lending, on the other hand, amounted to 1,634 billion. In line with supervisory expectations, bank funding is growing (a phenomenon necessary to diversify banks' funding sources after the reduction of ECB refinancing programmes). Total funding grew by 3.2 per cent year-on-year, with both deposits, as seen above, and bond funding growing by 12.2 per cent year-on-year and 13.3 per cent compared to July. The average rate paid on time deposits was 3.47 per cent, while the yield on current accounts alone was 0.5 per cent. Non-performing loans were stable at EUR 30.3 billion.
