First home loan interest rates: what to choose in 2023 between fixed and variable rates? Tips

The year 2023 has just made its debut also in Italy, with the promise of being a better year than the one just ended. Many are wondering whether this new year will bring any economic benefits, while others are preparing to invest some of their money perhaps in the purchase of a first home.

The first question is: is it worth buying a first home in 2023? Answering the question definitively is complicated, but what is certain is that the Budget Law 2023 undoubtedly provides for several new features concerning first home benefits.

Among the facilities provided for those who have bought their first home is the Solidarity Fund for mortgages. This allows those who have taken out a mortgage of up to EUR 250,000 to purchase their first home to benefit from an 18-month suspension of monthly instalment payments. Also extended until 2023 is the first home bonus reserved for young people under 36 years of age. The measure also provides access to the Consap guarantee fund, which allows mortgages to be obtained at subsidised rates.

In short, between bonuses and concessions, buying a house today is still a wise choice and undoubtedly protected by the government. But what will happen with mortgages in 2023? Will it be cheaper to open a fixed-rate or variable-rate mortgage? Well, experts have no doubts about this: in 2023 the variable rate will become more expensive than the fixed rate due to the indexes applied by the European Central Bank (ECB), which have pushed up short-term rates more than long-term ones. Consequently, the forecasts for those who must open a mortgage are for the fixed rate to be cheaper than the variable rate. A fixed-rate mortgage has the advantage of a constant instalment over time: it thus gives the opportunity to better plan the family budget.

The 2023 mortgage rate projections on the choice between fixed and variable rate consider the Euribor indices, which will increase throughout 2023. As of today, the index for the three-month calculation of the variable-rate mortgage instalment is projected to rise to 2.8 per cent during 2023 from the current 2.06 per cent. The upward trend of the index may only stop in 2024.

Watch out, however, for the rule included in the financial manoeuvre for 2023: the latter essentially restores a rule valid in 2012 that allows those who have signed a mortgage contract to switch from variable to fixed rates. That is, you can keep the spread of the variable mortgage you had signed by switching it to the Irs, the index you look at for fixed-rate mortgages. We will have to wait and see how the banks will apply this. We are at the beginning of the year, and it is still too early to tell. In the meantime, positive comments are coming from Fabi on the measure, which goes in the direction of helping the weaker segments of the population in a context in which the risk of poverty, between the pandemic and the war in Ukraine, concerns millions of Italians.

The prerequisites for buying a first home even in 2023, despite the complex period in the real estate market, are all there. In this case you can count on Engel & Völkers: with more than 40 years of experience in the brokerage of prestigious residential and commercial properties throughout Italy, our agency is able to offer you the best houses and flats for sale in Italy that best suit your needs.

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