The interest rate frenzy of the European Central Bank has produced loan delinquencies for €15 billion, the Italian trade union of bank employees has reported this week. This, as the ECB is considering a further increase at the next board meeting.
Of the €15 billion, €6.8 billion are home mortgage loans, €2.7 billion of which are already classified as bad loans, €3.4 billion as probable bad loans and €621 million as past due payments.
The increase in the cost of money, from zero to 4% over 11 months, has particularly hit mortgage loans with variable rates, a category with a total value of €140 billion.
Meanwhile, minutes of the ECB board meeting of June 14-15 show that an increase of 50 basis points was initially proposed. “A preference for raising benchmark interest rates by 50 basis points was also initially expressed in view of the risk of high inflation becoming more persistent. Emphasis was placed on the importance of sticking to a data-dependent approach,” the minutes say according to the Italian financial daily Il Sole 24 Ore.
Eventually, ECB chief economist Philip Lane’s proposal for a 25 basis points was accepted. But the discussion shows that the option of a larger increase in the future is on the table.
