Claudio Pacella: The Italian lifetime mortgage market has the potential to reach EUR 2bn per year

Claudio Pacella, CEO of 65Plus in Italy and EPPARG Board Member, was interviewed by WeWealth in Italy as part of a feature on lifetime mortgages, described as the ‘mortgage loan that turns the house into cash’.


Claudio explained that in general there are three reasons why people decide to take out a lifetime mortgage: an actual need for money, the fact of not wanting to give up the standard of living that they had become accustomed to and – increasingly – the desire to help their children to avail of immediate funds. He noted there are currently four credit institutions in Italy which grant lifetime mortgages: Mps (the only bank on the market since 2007), Intesa Sanpaolo, Imprebanca and Banca Popolare di Sondrio. 


Furthermore, Claudio noted that the average age of those taking out lifetime mortgages is 74 years, while the average amount paid is around EUR 90-95,000, equal to about one third of the value of the mortgaged property. He highlighted that rates move in a range between 3.5 and 5.25%, which is much lower than a few years ago, when they had reached the peaks of 7-8% in 2010-2011. Asked how much money would need to be reimbursed at the expiry of the loan, Claudio commented that the capital doubles in 15 years at a rate of 5%, and in 18 years, at a rate of 4%, so assuming someone takes out a lifetime mortgage in 2020, of EUR 100,000 you will return EUR 200,000 in 2035, or in 2038. He commented that the lifetime mortgage is a poorly developed instrument, but it has significant margins for growth. He concluded that in Italy, currently, while the lifetime mortgage market is today limited (few hundred million euros), the actual potential is around EUR 2 billion delivered per year, equal to 0.1% of GDP, and could be quickly achieved.


The full interview in Italian is available here.