The rise in interest rates on the ECB by 50 basis points, double what was announced, and the meteoric rise of the euribor are felt in mortgage market on several fronts. The reference index is close to 1% on average in July (0.992%) compared to -0.491% a year ago, so that those already mortgaged at a variable rate will see a substantial increase in the cost of their installments. Specifically, a loan of 180,000 euros over 25 years with a spread of 1% will pay about 120 euros more per month and about 1,460 euros more per year.
Fixed mortgage holders are not affected by these changes and will continue to pay the same amount throughout the life of the loan. The stability and security offered by fixed interests has motivated their hiring in recent years and they account for more than 70% of new operations, according to data from the National Institute of Statistics (INE). However, the change in monetary policy has caused financial entities are adjusting their offers. In general, variable options are improving, lowering spreads, while fixed rate conditions are worsening. And it is that the banks are now interested in benefiting from the rise in the Euribor.
In this context, according to the mortgage comparator HelpMyCash.comthe best fixed rate mortgages right now they are:
– Fixed mortgage from imaginBank: CaixaBank’s mobile bank offers 2.17% APR for up to 30 years just by direct debiting your salary and finances up to 90% of the lower of the purchase or appraisal values. The request is 100% online from the application.
– Evo Smart Mortgage: Bankinter’s 100% digital bank markets an interest rate of 2.33% APR for 25 years as long as the payroll of at least 600 euros per month is paid and home and life insurance are taken out.
– Fixed Easy Mortgage from Ibercaja: Fulfilling bonus conditions, the fixed rate is 2.52% APR for 25 years. It is necessary to domicile a minimum income of 2,500 euros per month and take out property damage insurance.
– BBVA Fixed Mortgage: If the payroll of more than 600 euros per month is paid by direct debit and home insurance and payment protection are contracted with BBVA, the conditions are from 2.81% APR to 15 years.
– Fixed mortgage Coinc: The lowest fixed rate offered by the entity is 3.01% APR, but for a term of ten years. No bonding.
– Open Fixed Mortgage from Openbank: The Santander Group’s online entity has a discounted fixed rate of 3.10% APR for up to 15 years. It is required to take the payroll and contract home, life and electricity and gas supply service insurance.
The most attractive variable rate mortgages of the moment are:
– Evo Smart Mortgage: It has a spread of 0.75% on the Euribor and an initial fixed rate of 0.95% for the first 12 months. It requires direct debiting of the salary and taking out home insurance.
– Pibank Mortgage: The entity, just by opening an account and contracting damage insurance, puts on the table a fixed rate of 0.98% for the first 12 months and then a differential of 0.78% on the Euribor. Finance up to 90% of the purchase value, with a maximum of 80% of the appraisal value.
– KutxaBank variable mortgage: With bonuses, it offers Euribor plus a differential of 0.79% the first year and 0.64% the rest. It is necessary: payroll debit for an amount equal to or greater than €3,000, contribution to pension plans equal to or greater than €2,400 per year and contracting home insurance.
– Coinc variable mortgage: It has a fixed starting interest of 1.25% the first year and the rest a differential of 0.75% plus Euribor. No bonding.
– Mortgage Without Backpack MyInvestor: If the mortgage is new, the fixed rate for the first year is 1.29% and then Euribor + 0.89%. In case of taking the mortgage to the entity (subrogation), the initial fixed rate is 1.09%. It does not require a relationship, but it does require that the income of the applicants (individually or jointly) be greater than 4,000 euros.
– Open Variable Mortgage from Openbank: You can get an initial fixed rate of 1.60% the first year and the rest a differential of 0.60% on the Euribor provided that the amount of the loan is greater than 150,000 euros and all the bonus conditions are met: direct debit payroll of at least 900 euros per month and take out home, life and electricity and gas supply insurance.
The mixed mortgage option
According to a recent study carried out by the Hipoo mortgage intermediation platform, mixed-rate mortgages represent savings of more than 15,000 euros compared to fixed and variable rates, taking as reference an average mortgage of 140,000 euros over 25 years.
The study consists of a projection framed in the uncertainty generated by the Euribor and the rise in interest rates by the ECB. The values used are real data taken from the company’s database.
Thus, selecting a fixed interest rate of 2.69%, the value of the mortgage amounts to 192,463 euros, with the total interest at the end of the life of the loan being 52,463 euros.
In the case of the variable rate mortgage, with a differential of 0.99% plus Euribor, assuming an average Euribor of 1.225% over 25 years, the total interest amounts to 44,533 euros and the total loan, 184,533 euros.
With a mixed mortgage that has a fixed interest of 2.09% during the first 10 years and a Euribor + 0.89% differential for the remaining 15 years with a variable tranche, the total result of interest to be paid, once the mortgage is finalized, adds the amount of 36,701 euros, 176,701 euros including capital and interest, assuming a saving of 15,762 euros compared to the fixed rate mortgage and 7,832 euros compared to the variable.
Mortgage crash
Experts in the real estate real estate sector foresee a slowdown in the purchase of real estate and mortgages next year due to the rise in ECB rates, which has just begun. In order to control the high inflation, the guiding rates are expected to reach 2% by mid-2023. It is one of the conclusions agreed by several experts who recently participated in the round table Rise in interest rates and possible recession: ¿? How will it affect mortgages and the real estate sector?
Nuria Rocamora, CEO of MyInvestor, maintains that “access to housing will be more difficult.” For his part, Ferran Font, director of studies at Pisos.com, believes that “everything indicates that we are going to see a slowdown in sales and mortgages in the coming year”. Silvia Escámez, CEO of Finteca, explains that “in recent months fixed-rate offers have become more expensive, going from rates below 1% to 30 years, to offers that already exceed 2%, and every fifteen days there are new upward adjustments”. He also points out that “all banks have improved the conditions to promote variable rates, and many have even withdrawn their offers at a fixed rate”. Given this scenario, the CEO of Finteca considers that “for individuals, now more than ever it is important to negotiate well to find the best possible offer, which is what our analysts do.”
At the moment, and according to the latest data from the INE, the number of mortgages for housing reached its highest figure in 11 years in May, up to 44,165 signatures. Operations soared 24.7%, the highest increase since last January. The data still does not include the rise in official rates that the ECB made on July 21.
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