Hard times for those who must buy a car with financing. The new rate hike of 0.25% decreed last week by the ECB, which reduced the key rate to 3.75%, led to the inevitable rising cost of mortgages and loanswhose effects fall mainly on families. In this context, the FABI, the Autonomous Federation of Italian Bankers, has estimated that to buy a car in installments with a ten-year loan, today we spend +22.1% compared to the end of 2021.

MORTGAGES AND LOANS: ESTIMATES BY ITALIAN BANKS

Going into more detail, the “Real estate credit and consumer credit file” produced by FABI recalls that the maturities of old fixed-rate mortgages, i.e. those disbursed until the end of 2021 or the beginning of 2022, they do not change and will remain intact until the end of the repayment plan. On the other hand, the monthly payments of the old variable rate mortgages have already increased on average by 65%: this means that those who previously paid a monthly payment of around 500 euros per month now pay 825 euros per month, or 325 euros more. However, it is very likely that, in light of the ECB’s decision, the monthly payments of old variable-rate mortgages could increase further and reach, on average, around 6% against 0.6% at the end of 2021: this means that for a loan of 150,000 euros for a period of 20 years, the monthly payment will be 1,090 euros, a good 325 euros more (+63.9%) than what would have been obtained there one year, or 665 euros. Even new fixed-rate mortgages have gone from an average interest rate of around 1.8% to over 5%, with monthly payments that can therefore even more than double.

AUTO FINANCING: THE STANGATA AFTER THE RATE RISE

But let’s move on to the sad notes of the car financing. Still according to the FABI file, at the end of 2021 the average interest rate for loans was8.1%. But given the rate hike decided by the ECB, it could even go as far as 12.8%. Translated in a few words: for to buy a car from 25,000 fully staggered, with a 10-year loan, the total cost goes from 37,426 euros to 45,704 euros, with an overall difference of 8,279 euros (+22.1%) compared to the prices at the end of 2021. Purchases in smaller installments do not fare any better: to buy a washing machine 750 euros entirely in several installments, with a loan over 5 years, the total cost goes from 942 euros to 1,061 euros, with an overall difference of 119 euros (+25.3%) compared to the prices at the end of 2021.

IN ITALY 6.8 MILLION CITIZENS IN DEBT

As we initially anticipated, these increases affect most Italian families. Out of a total of 25.7 million households, in fact, those who have a mortgage are around 3.5 million, out of a total of 6.8 million citizens in debt also with other forms of financing, such as consumer credit and personal loans (including car loans). Between consumer loans and personal loans, the banks disbursed 253 billion euros in loans to citizens, in line with the values ​​at the end of 2017, but slowing down compared to the trend of recent months, a sign of the impact negative of the increase in the interest rate.