Mortgages and loans in Italy: interest rates rise again in October 2025, but demand is also growing

In October 2025 the average rate on new home purchase transactions was 3.30% compared to 3.28% in the previous month. Still far from the 4.42% recorded in December 2023. Not only the rate on loans to households went up, but also the average rate charged by banks on new business loans in October was 3.56% compared to 3.38% in September 2025. The average rate on total loans, those taken out over the years, was 3.95 per cent, up 0.01 from 3.94 per cent in September. This is according to the latest bulletin of the Italian Banking Association (ABI).

Even in the face of rising interest rates in October 2025 there was a 1.5% increase in loans to businesses and households, albeit to a lesser extent than in the previous month. In September 2025, in fact, loans to households had grown by 2.2% and those to businesses by 1.2%. For households, the ABI further emphasises, this is the tenth consecutive month in which an increase was recorded and for businesses it is the fourth consecutive month in which loans grew.

Indirect funding, i.e. investments in securities held with banks, increased by €90.7 billion between September 2024 and September 2025 (€19.5 billion households, €17 billion corporates and the remainder to other sectors, financial companies, insurance companies, public administration). Total direct funding (deposits from resident customers and bonds) also increased by 3.3% year-on-year in October 2025, continuing the positive trend recorded since the beginning of 2024 (+3.0% in the previous month). Deposits, in their various forms, also grew by 2.8% year-on-year (+3.1% the previous month). Finally, medium- and long-term funding, through bonds, rose 6.9% in October 2025 compared to a year earlier (+2.7% the previous month).

The rate charged on new fixed-term deposits (i.e. certificates of deposit and time deposits) in October 2025 was 2.10%. In September, this rate was higher in Italy than the euro area average (Italy 2.10%; euro area 1.86%). Compared to June 2022, (last month before ECB rate hikes) when the rate was 0.29%, the increase was 181 basis points. The yield on new issues of fixed-rate bank bonds in October 2025 was 3.50 per cent, an increase of 219 basis points compared to June 2022 when it was 1.31 per cent. The average rate on total deposits (certificates of deposit, savings deposits and current accounts) was 0.64%, while the average rate on current accounts, which do not have an investment function and allow the use of a multitude of services, was 0.28% in October 2025 (as in the previous month; 0.02% in June 2022). The margin or spread on new business (the difference between the rates on new loans and new deposits) with households and non-financial corporations in October 2025 was 188 basis points.

The total of non-performing loans, probable defaults and exposures past due or in arrears calculated net of