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Italian Mortgage Issuance Plummets 47 Percent in First Quarter

July 9 (Bloomberg) -- Lending for homeowners in Italy plummeted 47 percent in the first quarter as banks raised rates and tightened credit standards, according to a study.

“The residential mortgage market has demonstrated a progressive slowdown from the second half of 2011,” Italian credit bureau CRIF SpA said today in a joint statement with research group Prometeia and Assofin, a lenders’ association.

The drop compares with declines of about 19 percent in the three months ended Dec. 31 and less than 1 percent in the first quarter of 2011, Maurizio Liuti, a spokesman for CRIF, said by phone. Mortgages issued for renovations and purposes other than property purchase fell 80 percent in the first quarter.

Prime Minister Mario Monti passed a 20 billion-euro ($24.6 billion) austerity package in December, which included higher property taxes. Italian banks have been retreating from the mortgage market as the country’s recession pressured profits and asset quality. First-quarter home sales fell 20 percent, the biggest decline in at least eight years, to about 110,000 transactions, a Finance Ministry agency said June 19.

To contact the reporter on this story: Andrew Frye in Rome at afrye@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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