Falling rates, rising dreams: the new Italian property market for foreign investors

Italy has always been the most popular destination for foreigners and the love for our country has infected the whole world thanks to its history, culture, art and above all its lifestyle. In recent years, however, a new reason for investing in the Bel Paese has been added: the very favourable mortgage rates.

With the cut in interest rates by the European Central Bank (ECB), a series of favourable conditions have been created for buyers seeking to invest in real estate in Italy, with decidedly advantageous conditions for both variable-rate and fixed-rate mortgages. This scenario obviously brings new opportunities especially for foreign investors, who can take advantage of this circumstance to realise their dream of a house in Italy.

Falling rates: a boon for borrowers

The European Central Bank (ECB) has gradually lowered interest rates throughout 2024 in an attempt to revive the European economy. According to analysts, this trend is expected to continue in 2025. This means big savings for those with variable-rate mortgages: lower and lower monthly instalments.

A typical rate for a 25-year EUR 126,000 variable-rate mortgage taken out at the beginning of 2022 will see its monthly instalment fall by around EUR 66 at the beginning of 2024. In December 2024, when a second rate cut is expected, the instalment could fall even further, by another 18 euros. Forecasts for 2025 predict a further drop in the 3-month Euribor, which could bring the monthly instalment of this same mortgage down to almost EUR 600.

Fixed-rate or variable-rate mortgage: which is better?

The choice of a fixed or variable rate mortgage is a personal decision, based on several factors such as risk appetite and rate forecasts.

The fixed rate guarantees the borrower the certainty of a perpetual instalment for the entire duration of the mortgage, sheltering them from possible rate increases.

The variable rate, on the other hand, is linked to the trend of certain reference indices (e.g. Euribor) and allows the borrower to benefit from certain variations.

Currently, with the downward trend in rates, the fixed rate is better than the variable rate. This could be an interesting option for those who want to guarantee a stable instalment in the long term; however, the subrogation of the variable mortgage to a fixed rate is also a possibility.

Subrogation: Things to keep in mind

Mortgage subrogation is the transfer of one's mortgage from one bank to another with better conditions. In a context of falling rates, such as the current one, this operation can be particularly convenient.

This means that if, for example, one wanted to replace one's current fixed mortgage with a variable one, one could obtain an immediate saving on the monthly instalment, going from a variable instalment of EUR 683 to the current fixed one of EUR 565.

For foreigners an opportunity to grow in Italy: Invest in Italy

Favourable interest rates on mortgages also make Italy an attractive real estate market for foreign buyers. Buying a property in Italy is not only a sense of financial security, but also an opportunity to experience the best of what Italy has to offer.

Foreigners can obtain mortgages in Italy under almost the same conditions as Italians. Italian banks also pay close attention to incoming international investors and provide them with products and services tailored to their needs.

A mortgage can be considered and consulted with determined values with an experienced financial advisor to assess a person's financial situation and determine which mortgages are most suitable for those in need. A qualified professional can accompany you through all stages of the buying process, from searching for a foreign property to signing the mortgage contract.

Conclusions

Low interest rates on mortgages today make the Italian property market a great opportunity for foreign investors. Italy, a country renowned for its history, culture and natural beauty, also offers a high standard of living. The answer is: investing in a property in Italy, with an affordable mortgage, is the ideal choice for those who want to realise a dream and put down roots in a hospitable land full of opportunities.

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