What are the main difficulties in applying for a mortgage during an emergency?
Operationally until May 3, it was complicated because many branches did not allow access except for urgent banking transactions, which did not include mortgage advice. To date, access is allowed, but an appointment must be made due to the quota of the inputs necessary for social distancing. The main impediments that occurred were of three kinds, related to the theme of proximity between people. The first theme is that of the collection of the signed mortgage application, without which the procedure cannot be started. Another problem that slowed down until May 3 was the fact that some banks still used the bilateral act, i.e. signed in the presence of the notary and signed by both the borrower and the bank representative. This procedure has become impossible with the need for social distancing. Finally, the issue of real estate assessments: appraisers did not have the opportunity to carry out on-site inspections due to the Covid emergency, which blocked several mortgage practices. From 4 May, however, these aspects have returned, so gradually we are returning to operational normalization.
How did these difficulties resolve?
Some technological and procedural innovations have been seen. For example, some banks have equipped their consultants with devices to be able to carry out consultations and manage some documents remotely, structuring remote recognition processes that allowed the digital signature of the mortgage, without having to go to the branch. Others are postponing the moment of physical recognition of the borrower to the definitive signature of the deed, managing everything that comes first via email. Even the notaries have equipped themselves to be able to manage the files remotely, while the bilateral acts have been replaced by unilateral ones, signed only by the client himself. A procedure that is usual for mortgages granted by online banks and that has also been adopted by only “physical” institutions.
Could anyone wanting to apply for a mortgage experience some resistance from the banks?
As for credit rules, banks do not currently appear to have significantly changed their lending criteria. The rules that applied before the pandemic also apply now: employees or freelancers do not suffer particular discrimination in the granting of credit, always according to the activity carried out. Instead, people who have been placed on layoffs are more attentive, even if for a few hours. This becomes an impeding element for the granting of the loan, even if this does not prejudice that once the situation is over, we can go back to talking about the loan.
What happens for those who want to suspend a mortgage?
Regarding the suspension of mortgages, apart from the provisions of the Gasparrini fund for those who lose their jobs and for those who have suffered loss of income due to the coronavirus, it must be said that many institutions, already adhering to the Abi convention already existing for this purpose, they spontaneously contacted their customers giving the possibility to suspend the mortgage payment, up to 12 months in whole or only for the principal, thus extending the loan duration.
Who asks to take out a mortgage today?
The focus of demand remains within the subrogation; this is due to the fact that interest rates remain very low, especially as regards fixed rate mortgages, with the Irs still very close to zero with finite rates close to 1% even for durations of 15-20 years. This condition, combined with the possibility of using the quarantine time to better study and optimize their family budget, has led many people to look for surrogate solutions that would allow you to save on the installment. On the other hand, there is relatively little demand for financing for sales, which have tended to be postponed, unless we talked about operations already started before the pandemic.
What are your mortgage predictions for 2020?
Our expectation is for a considerable contraction in sales in this two-month period, which is difficult to recover during the year. At the end of the year we will see a contraction compared to 2019 which will have a depressing effect on prices in the national average. The new lending market will be supported by subrogation applications in anticipation of rates that will remain low for a long time.