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Mortgage loans in Italy - SWOT analysis
Databank Cerved Group, August 2012, Pages: 16
This report provides a SWOT analysis on the Mortgage loans Italian market: strategic map of operators by market, product, typology, nationality, strategies observed by the main players in terms of advertising, distribution channel, communication, winning strategies and their drivers, opportunities and threats on the short / long term.
Mortgage loans for families and other individuals can be categorised as follows:
Mortgage loans to purchase or renovate a home ("conventional" mortgages)
- for the purchase of a primary residence
- for the purchase of a second home
- for home renovation
Debt consolidation mortgages, remortgages and home equity loans ("non-conventional" mortgages)
- Debt consolidation mortgage loans: to consolidate debt from various sources into one loan secured through the mortgage of a property.
- Remortgages: a mortgage loan taken out to replace an existing one, whether simply to renegotiate the terms or to obtain additional cash. In Italy, this segment also includes replacement mortgages.
- Home equity loans: a loan in which the value of a home is pledged as collateral.
Other mortgage loans: this is a residual category comprised of all other mortgage loans disbursed that are not included in any of the aforementioned segments. Most of these are mortgages that are not classified by the lender.
This report will cover the lenders in the sector. Distributors such as non-bank financial companies, credit brokers and real estate agents, which act as intermediaries but do not directly issue credit, are excluded from the present research and are analysed in a distinct report.
The Italian mortgage loan sector is national in nature due to some particular characteristics of the Italian market, along with the importance of having a widespread distribution network and consolidated relationships with clientele in order to reduce operating risks. Even still, the presence of foreign banks within the sector is significant.
The total amount of mortgage loans disbursed in Italy in 2011 was Euro53.8 billion, 12.1% less than in 2010. Mortgages for the home purchases or renovations fell by 8.3%, while the amount of new non-conventional mortgage loans (debt consolidation, remortgages and home equity loans) decreased by 32.8%.
2011 was a two-sided year for mortgages: lending rose by over 10% in the first half of the year, with a positive trend in home purchase mortgages and even stronger growth in remortgages. Then in the second half of the year, the amount disbursed fell by 20-25% year-on-year, with a substantial decline in home purchase mortgages and an outright collapse in remortgages.
The sharply negative trend seen in the second half of 2011 turned even more acute in the first half of 2012: the mortgage market declined by over 45%. Assuming a slightly less negative trend in the second half (only because the comparison base from the second half of 2011 is very low), the amount of mortgage loans disbursed in 2012 is nevertheless forecast to be more than 30% less than in 2011. Specifically, remortgages are expected to decline by a massive 86%, as current customer spreads offered make refinancing an unattractive proposition. Yet home purchase and home renovation mortgage loans are also forecast to decrease by 25.8% in 2012, a significantly greater decrease than the expected drop in real estate transactions.
The critical factor that changed the mortgage market trend was the sovereign debt crisis in the Eurozone. Starting in August 2011, the spread between Italian government bond yields and German government bond yields began to rise steeply. This led to a crisis in the financial sector and hit the general economy as well, significantly reducing both the supply of and demand for mortgages.
Supply-side factors include:
- rising cost of funding for banks; this, combined with a deteriorating credit quality among clientele, induces lenders to become more selective in offering mortgages;
- gap between the Euribor rate and banks' effective cost of funding: mortgages being issued in the current market phase could consequently become subject to refinancing requests and renegotiations if the situation were to return to normal;
- regulatory restrictions on the combined sale of mortgage and insurance products; these restrictions reduce an important source of profit associated with mortgage lending.
Demand-side factors include:
- a deteriorating economy in southern Europe, with a significant drop in GDP and in families' disposable incomes;
- high uncertainty over future economic trends makes it difficult for consumers to plan major expenses over the long term; as such, the number of real estate transactions and requests for loans have gone down.
Databank’s methodology for Competitors reports begins with a careful screening to identify the main organisations that are representative of a given sector. Several one-to-one interviews are then conducted with the selected organisations. Questionnaires are sent to all the leading companies on an annual basis. The information collected is then verified by an expert in the particular sector using a system of counterchecks to guarantee that the information is entirely reliable and consistent. The process is then completed using Cerved Group’s proprietary information about Italian enterprises. All Competitors reports also include details concerning the strategies and performances of the leading companies in each sector.
LIST OF COMPANIES ANALYSED 3
1. INTRODUCTION TO METHODOLOGY 4
2. SECTOR DESCRIPTION 5
2.1. Scope 5
2.2. Segments 5
3. STRATEGIES OBSERVED 6
3.1. Strategic map of operators 6
3.2. Winning strategies 11
4. OPPORTUNITIES AND THREATS 13
CONNECTED PRODUCTS AND SERVICES 14
List of Tables and Graphs:
MAPS OF STRATEGICS GROUP: TYPES OF OPERATORS, 2012
MAPS OF STRATEGICS GROUP: DEVELOPMENT STRATEGIES, 2012
MORTGAGES: TABLE FOR STRATEGIC GROUPING, 2011
MORTGAGES: OPPORTUNITIES AND THEIR SHORT/LONG TERM IMPACT, 2012
MORTGAGES: THREATS AND THEIR SHORT/LONG TERM IMPACT, 2012
B@NCA 24-7 S.P.A.
BANCA CARIGE S.P.A.
BANCA DELLE MARCHE S.P.A.
BANCA MEDIOLANUM S.P.A.
BANCA MONTE DEI PASCHI DI SIENA S.P.A.
BANCA POPOLARE DELL'EMILIA ROMAGNA SC
BANCA POPOLARE DI MILANO S.c.a.r.l.
BANCA POPOLARE DI VICENZA SCPA
BANCO DI SARDEGNA S.P.A.
BANCO POPOLARE SC
CASSA DI RISPARMIO DI BOLZANO - SUDTIROLER SPARKASSE S.P.A.
CREDITO VALTELLINESE SC
DEUTSCHE BANK S.P.A.
DEUTSCHE BANK MUTUI S.P.A.
ICCREA BANCA S.P.A.
ING DIRECT N.V.
INTESA SANPAOLO S.P.A.
UBI BANCA SCPA
VENETO BANCA SCPA