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Buying a Home in 2020: Mortgages at an All-time Low

Buying a Home in 2020: Mortgages at an All-time Low - 2020 has already proved, without a doubt, a very difficult year: between the pandemic and the ensuing economic crisis, many of those who wanted to buy a house have desisted from the intent. But precisely because of the crisis and other economic conjunctions, 2020 has turned into the most affordable year to take out a mortgage: rates are at an all-time low, and are around 1 for fixed-rate mortgages, with a minimum gap in variable-rate mortgages. Investigative and expert costs have also declined: we are talking about upfront expenses that, in the most affordable mortgage offers, range between 800 and 2000 euros, depending on the amount borrowed and the value and type of home. In short: it's really the right time to buy, especially if you are looking for a first home.

Buying a Home in 2020: Mortgages at an All-time Low


Rates at all-time lows and continuing down

The first quarter of 2020 was characterized by rates around 1 or 1 or little more for fixed-rate mortgages, but the particular economic conditions this year – and above all, the mandatory shutdown of the housing market during the lockdown period – have stimulated banks to do more: after the sharp drop in rates we witnessed during the month of May , June 2020 recorded a new record, with rates below 1. In some cases, we are talking about fixed interest rates at 0.5 for 20-year mortgages, and less than 1 for 30-year mortgages. An unusual situation has occurred during this period: variable-rate mortgages, according to the analysis of investment institutions, are even more expensive than fixed-rate mortgages, at least for 20-year mortgages.

According to the same analysis institutes, those who want to buy a new home (especially if we talk about the first house) must definitely move now. This is also because, as many people know, the trend of the btp-bund spread heavily influences mortgage rates; To date, the spread is stable and relatively low, but a possible hike would cause an immediate increase in rates. In short: a series of economic and social conditions have created the perfect scenario for banks to offer mortgages at very affordable rates, but it is not said that these conditions will last much longer!

Low rates and a dynamic market despite the pandemic: here's why investing

The lockdown made many Europeans want to buy a house – perhaps choosing a larger one, with a garden or with a nice terrace . Today, buying a home can be an excellent idea: thanks to low rates and upfront expenses, you will pay virtually only the actual value of the house. In addition, at the moment, the price of some categories of real estate is falling: with careful research work – or opting for the always affordable real estate auctions – you could win the house of your dreams at a really affordable price.

You can, for example, find your first home to live independently, or choose to buy a home as a form of investment: in any case, you can enjoy this particular economic situation, and spend very little on your mortgage. If your intention is to buy a house as an investment, the interest savings can be reinvested in the renovation of the property, to increase its value.

What happens in the world of real estate auctions?

Of course, the world of real estate auctions has also contracted due to the lockdown; nevertheless, the many Italians interested in buying a house have helped to keep the market dynamic, as far as possible. For this reason, even the prices of properties in the judicial auction have suffered only a slight decline: thanks to the very low rates and the small decrease in average property prices, you could win a nice apartment or a house at prices unthinkable until a few years ago.

At the moment, for obvious reasons, the most sought-after houses are independent ones with garden, or spacious apartments with at least one balcony, a terrace and a condominium garden. In general we can say that the more spacious houses, which will prove more comfortable in the event of a second, probable wave of Corona virus, are in high demand, and for this reason the decline in prices is minimal. Apartments, especially if located in the city centre, have fallen more significantly: for the very expensive houses of Milan, for example, the average decrease in prices is around 8 – 10, according to the data of June 2020. It is however important to note that any declines or, on the contrary, increases in the valuation of properties, vary greatly depending on the location of the property itself: today, buyers tend to avoid the city center and metropolises. preferring serviced but more peripheral neighborhoods, overall less frequented.
In this particular historical scenario, small countries are also rewarded in the orbit of large cities: these are places where finding a spacious housing solution is simpler and cheaper, and that offer the convenience of being able to safely reach the city of reference, without being immersed in chaos. These are direct effects of the pandemic, which reversed a historical trend, and created an unequal distribution in price changes even within the same geographical area.

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