Inflation soars and mortgages go up: this is what changes for incomes, pensions and savings


Inflation soars and mortgages go up: this is what changes for incomes, pensions and savings
Written by aquitodovale

The first impact of inflation comes on spending and bills. But the long wave of the generalized increase in prices, which causes our income to lose value, also affects finance, our savings and mortgages. On the wages front, the crux of contract renewals remains, while pensions and severance pay has been almost automatically and completely adjusted.

The markets look to inflation and move on expectations, anticipating possible future moves by central banks, which will certainly raise rates to curb prices. This mechanism has already had consequences on mortgages – with a rate hike of 1.5 / 2.0 percentage points – and on savings. But let’s see how.


Obviously the impact of inflation, and the increase in rates, will have a different impact depending on the type of mortgage. Variable-rate mortgages linked to the Euribor will be affected: at the beginning of the year this reference rate had a negative trend (-0.5 the twelve-month rate of January 3) while at the end of June it stood at 1.04%): it increased by more than one and a half points. No change, of course, is there for the old fixed-rate mortgages. But be careful, those who have to take out a new mortgage now do not assume that the fixed rate one is better. For this type of mortgage, the reference rate is called Eurirs or Irs: the rate on twenty-year mortgages went from 0.60 at the beginning of the year to 2.41 on 29 June. In other words, the market has already largely adapted to the expected rate hikes.

The savings

Inflation not only means rising prices, but also a devaluation of our purchasing power. Money left in the account or kept under the brick loses value. But even those invested must produce gains, while stock markets are in sharp decline and bond markets are weighed down by the fact that rising rates will devalue them. The advice is to be patient and wait for the recovery, which will take place.

Government bonds

Government bonds, in general, are characterized by the safeguarding of the capital “at maturity” and by a coupon (the return usually half-yearly). If rate increases are on the way, the coupon does not adjust and remains low compared to the market: therefore the invested capital loses value, but this only if we want to sell off the investment in advance. However, the latest BTP offered by the Treasury, the BTP Italia guaranteed a minimum coupon of 1.6% but also a six-monthly adjustment to the Italian inflation rate, as well as a double loyalty bonus to those who keep the bond until the expiry of the 2030.

Salaries and renewals

With inflation at 8%, wages lose value. The debate on the adjustment with the negotiation of renewals is very hot and will heat up even more in the autumn. Currently the reference for the adjustment is the IPCA (the consumer price index harmonized at European level), which in the latest Istat surveys was 8.5%, which however must be calculated net of the prices of imported energy goods. . Clearly, since much of the inflation now derives from the cost of imported gas and oil, the unions do not see this as an adequate parameter. Firms, on the other hand, fear that wage increases, at a time of production difficulty, could extend the crisis. The proposed solution is the reduction of the tax wedge, that is the difference between the net salary, which arrives in the employee’s pocket, and the gross salary that the employer pays with taxes and contributions. It means less taxes and therefore public resources are needed.

Safe pensions and severance pay

As of this year, indexation has been reintroduced for pensions. Retirees who receive a check up to 4 times the social check (therefore up to about 2,000 euros) will have a full revaluation, those between 4 and 5 times 90%, beyond this threshold 75%. It is also good for the revaluation of the provisioned severance pay which, according to the current rules, is revalued by 1.5 annually plus 75% of the consumer price index of the previous year, a value that this year is 1. , 9% based on the December figure but that next year will be much higher.

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