Fixed-rate mortgages reduce Italian households' interest-rate risk
Variable-rate loans fell from 73 to 26 percent of Italy's outstanding mortgages between 2015 and 2025, reducing households' exposure to interest-rate changes. Bank of Italy research finds no broad residential mortgage vulnerabilities over that period.
More lending, fewer impaired loans
Bank of Italy researchers Alessandra Albanese, Federica Ciocchetta and Francesco Pipitone trace Italy's mortgage market over 2015-2025.
Outstanding mortgages grew 25 percent, reaching around 20 percent of GDP and 31 percent of household disposable income.
Growth stopped in early 2024 after monetary tightening began in July 2022, then resumed moderately as rates declined.
Residential exposures rose from 11 to 16 percent of banking assets.
The gross non-performing loan ratio reached 1.2 percent in December 2025; Stage 2 loans fell from 10 percent at end-2021 to 5 percent.
Annualized deterioration across household lending declined from 2.3 to 0.6 percent over the decade.
Loan sales and faster recoveries also reduced impaired stocks.
Higher leverage meets public guarantees
Average origination loan-to-value rose from just under 60 percent in 2015 to around 70 percent in 2025; just over 21 percent of new loans exceeded 80 percent.
Additional guarantees often covered these loans.
Average loan payments absorbed 26 percent of borrower income in 2025.
Borrowers under 36 accounted for 46 percent of new contracts in 2022-2025.
In 2024, one-third of banks used digital mortgage channels, mainly for information and quotations.
Green mortgages reached 12 percent of lending in 2025, with 35 percent of surveyed banks offering them.
Resilience still requires scrutiny
The authors find no broad financial stability risks from residential mortgages.
Fixed rates reduce household payment uncertainty, while additional guarantees mitigate banks' exposure to high loan-to-value lending.
They nevertheless call for continued supervision of lending growth and looser credit standards.