Remortgaging collapsed 63.4% while purchase lending grew 6.6%. The figure that matters, though, is different: collateral prices rose about 11% for new and refurbished stock against a 5.5% average.
Italian mortgage demand has cleaned itself up. In the second quarter of 2026, applications aimed at buying a first or second home reached 76% of the total, while remortgaging fell to 19%, according to the CRIF and MutuiSupermarket Bussola Mutui. A year ago the split was far more even. The reason lies in the rate curve: rising IRS levels have narrowed the band of contracts for which switching still pays.
Bank of Italy lending data makes the point more forcefully. First-quarter flows were down 2.1% against the same period of 2025, but the aggregate hides two opposite movements: purchase mortgages grew 6.6%, remortgaging contracted 63.4%. Housing credit has not weakened. It has stopped recycling existing stock and gone back to financing transactions.
The more interesting figure concerns collateral rather than volume. In the second quarter, the per-square-metre price of properties pledged as mortgage security rose 5.5% year on year. That average conceals a wide spread: new-build recorded 11.1% and refurbished stock 11.2%, both comfortably double the overall figure. Unimproved second-hand property, by subtraction, is moving far more slowly or not at all.
This matters directly to anyone valuing security. If credit concentrates on new and refurbished assets, and prices in those segments run at twice the market average, the mortgage book banks are building today rests on collateral of a qualitatively different kind. More energy-efficient, more liquid in enforcement, but also more exposed to a segment that has already run hard and prices in expectations of further gains.
A second effect gets less attention. Credit has become a mechanism for sorting the housing stock. A property that fails to attract financing — or attracts it on punitive terms because of energy rating, condition or location — loses a substantial part of its buyer pool, since mortgage-assisted purchases have returned to growth and now account for the majority of transactions in the major cities. Value polarisation, then, is not driven by buyer preference alone. Lending criteria amplify it.
The implications for existing stock are asymmetric. Owners of high-rated or recently refurbished property enjoy deeper demand and shorter selling times. Owners of dated property face a blunt choice between refurbishment, at costs that remain high, and a discount that tends to widen over time. European commercial markets have already been through this, where the yield gap between ESG-compliant buildings and the rest of the stock hardened within a few years.
Nomisma reports that mortgage-assisted residential purchases continue to grow through 2026, confirming credit as the main engine behind the transaction recovery. A market driven by credit, though, also inherits the preferences of those extending it. If banks favour new and efficient collateral — and prudential rules on climate and environmental risk push in that direction — the geography of property values ends up reflecting not so much where people want to live as where it is possible to borrow in order to do so.