The first quarter of 2018 is now archived, but some interesting innovations seem to emerge on the horizon for real estate sales and mortgages.
What are the new strategies of the banks ? The real estate market is really recovering, and what are the main innovations that can be found?
The real estate market in Italy
The real estate market in Italy seems to have undertaken a slight recovery, certainly not as disruptive as it had been instead the fall in the period of crisis. As we have seen a while ago, in the face of an increase in the number of sales, prices are struggling to rise, especially in comparison with other European countries. Today the number of trades is little more than half compared to a decade ago, in the golden age of the real estate market
Read also: Is the real estate market really recovering?
In this context, therefore, even the banks certainly cannot expect to acquire new customers for real estate mortgages with the high volumes of the boom period in the real estate market . And in fact in recent months the mortgage market has certainly been sustained to a considerable extent by subrogations: many families, taking advantage of the time window in which rates, both Euribor and Eurirs, are particularly low, have thought well (and still they are doing it) to obtain favorable conditions by resorting precisely to the mechanism of subrogation.
The objectives of the banks
The banks obviously always have among their objectives the acquisition of customers on the main product among the loans, or the mortgage loan for the purchase of a house. However, depending on the moments and the surrounding conditions, the push towards this particular goal can be more or less strong. Right now it seems that the focus on acquiring new customers on mortgages is growing. For what reason?
- First of all we have to consider that the mortgage can be a tool to build customer loyalty . In general, the duration of the loan is wide, it can go up to 20 years and even more. Financial products have grown in number, and in some cases are very profitable for banks. From classic current accounts to investment instruments, there are so many opportunities for banks to increase the value associated with each individual customer. Here, then, that the mortgage is no longer seen only as a product in itself, but as a vehicle to improve customer loyalty.
- Another aspect to take into consideration is that to date the rate values do not reflect , as often happened in previous years, the actual cost of money. Acquiring new customers, even with aggressive policies, can be expensive immediately, but at the same time be an excellent investment for the future.
What are the ways to acquire new customers?
The banks are therefore ready for more aggressive policies: the moment of subrogation seems to be near exhaustion, how can we then acquire new customers?
What can be noticed on the mortgage market is first of all a reduction in spreads. The spread has in fact always been a tool that allows the bank to accurately control its mortgage strategy. Does a bank want to have a portfolio product without pushing it that much? Just predict a high spread compared to the market average and certainly will not have the queue in front of the counter (and the few customers who decide to have a mortgage with you, will have higher margins). If, on the other hand, the bank aims to acquire many customers on mortgages, perhaps removing them from the competition, a low spread can be of great help: it is precisely what seems to be happening in this period.
Another measure that goes in the direction of increasing acquisitions on mortgages is the return to very high values of capital disbursed compared to the value of the property. Going beyond 80% of the value of the property may be very risky for the bank, but it can certainly also help boost the real estate market and, consequently, the mortgage market.
The significant benefits for families
All this can only have a favorable impact for families who are considering buying a house and who, to do so, need to open a mortgage loan with a bank. High payable sums, low spreads and, let’s not forget, interest rates still at minimum levels can be of great help.
It is therefore a moment still favorable both for those who have to buy a house and for those who intend to review the conditions of the loan in place, both through a renegotiation and a subrogation. And this certainly can give new life to the real estate market .