The Surge in Italy’s Mortgage Market

Italy’s credit market is showing clear signs of recovery, closing March 2025 with strong momentum, largely thanks to renewed growth in the mortgage sector. Home loans rose by 62.5% compared to March 2024, marking a sharp reversal from the downturn of 2023, when the market had contracted by 25%.

The rebound began in early 2024, as more households returned to the housing market. Mortgage applications increased by 44.1% in the first quarter of that year, peaking in January 2025 with a 51.3% jump compared to the same month the year before.

What’s driving the surge in demand?

The key factor behind this sharp rise in mortgage applications lies in falling interest rates. Since June 2024, the European Central Bank has cut rates six times, bringing them down from 4% to 2.5%. This shift has made it easier — and less risky — for banks to issue loans, opening the door to more accessible financing for households across Italy.

While the recovery in mortgage demand is unfolding across the country, it is Central and Southern Italy that are leading the way, with application growth of 68.5% and 72.8% respectively. This trend is particularly evident in major cities: Naples stands out with a remarkable 127% increase in mortgage requests compared to March 2024, followed by Rome with an 84% rise.

The current surge in mortgage demand is being driven primarily by Millennials (aged 31–45), who account for over half (52.4%) of all applications. However, a particularly noteworthy trend is emerging among Generation Z (aged 18–30). While they represent a smaller share of the total, the number of young applicants in this age group has jumped by 81.8% — a sharp rise that signals growing interest in home ownership among younger Italians.

A notable development in the market is the growing popularity of “Green Mortgages.” These loans are specifically designed for the purchase of energy-efficient properties (rated class A or B) and offer exceptionally low interest rates, rarely exceeding 3%. Remarkably, six out of ten families now say they are actively seeking high-efficiency homes with the intention of applying for a Green Mortgage.

To sum up, the sharp increase in mortgage demand is a highly positive sign for Italy, especially when considering the main drivers behind this trend. It suggests that young people are actively seeking stable housing as they look to build their future.

Translated by Iuliana Cindrea

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