Italian credit market expands as bank loans rise 3% and mortgages jump 25%

Bank lending to households and firms in Italy increased by 3% year‑on‑year in May 2026, marking the 17th consecutive month of growth for households and the 11th for firms. The average interest rate on existing loans held at 4.04%, while the rate on new corporate loans fell to 3.51%. Deposit rates rose to 2.22% and the margin between loan and deposit rates widened to 184 basis points. Non‑performing loans continued to shrink, reaching €25.9 billion in April 2026, down from €27.7 billion a year earlier.

In 2025 the Italian mortgage market accelerated sharply, with new home‑loan disbursements up more than 25% compared with the prior year, spurred by lower borrowing costs. Buyers under 36 became the largest group of first‑time borrowers. Over the past decade the wage gap between workers aged 18‑29 and those over 50 narrowed by 3.2 percentage points, reflecting a more stable employment environment.

These trends indicate a broadly strengthening credit environment in Italy, with higher lending activity, improving loan‑quality metrics, and gradual reductions in income inequality.