ROME: Italian banks' lending to households and businesses increased in June while the average rates charged on new loans decreased to a record low, banking lobby ABI said on Tuesday.

ABI data showed loans to the private sector were up 1% year-on-year in June compared with an annual increase of 1.1% in May.

The average interest rate charged on new loans to companies decreased to 1.36% in June from 1.43% the previous month, while rates on new home mortgages dropped to 1.78% in June from 1.85% in May.

A breakdown of data for May showed home mortgages grew by 2.5% year-on-year while corporate loans decreased by 0.2%, a drop which ABI blamed on weak investment demand from companies.