Upward spread: what the consequences on loans will be
Is there a connection between loans and spreads? With the differential between the Italian ten-year BTP and the German Bund equivalent constantly above 300 basis points, and the oscillations of government bonds in the style of a roller coaster, it is necessary to understand what the concrete effects are on households and businesses and in particular on credit to consumers. In other words, is it more difficult (or more expensive) for Italian citizens to get money on loan?
Unfortunately, the answer would seem to favor yes. The strong rise in the spread is in fact not good news for banks and credit institutions: having to deal with the increase in the purchase cost of money and, at the same time, with the sharp depreciation of the value of the government bond, they could opt for more restrictive policies in granting loans (and mortgages), for example asking much higher interest rates than usual, or increasing ancillary expenses and commissions.
Get an installment loan
This would obviously translate into higher installments to be paid for those who (painstakingly) get a loan, a circumstance that could push many families to give up financing at the outset. The consumer credit market would thus fall back into a negative spiral with the risk of returning to the meager post-economic crisis levels of 2008, nullifying years of slow but progressive growth also confirmed by the data of last September. Already, we read in various newspapers, the main banks of our country have increased the cost of medium-term loans by 50/75 basis points.
Needless to say, a tightening on loans would damage not only families but also Italian companies, with negative impacts on their financial statements and possible, indeed probable, repercussions on the stock market (in the case of listed companies).
A real danger that has prompted Economy Minister Giovanni Tria, and therefore not just any one, to raise the alarm on the level of the spread: So high we cannot afford it too long: not so much because of the impact on interest on debt, which is very slow, but a high spread poses a problem for the weaker part of the banking system.