With just a few words, Christine Lagarde, the president of the European Central Bank (ECB), has altered the scenario forecast for 2022. The market did not expect that the French banker, who had categorically ruled out raising interest rates despite inflation, would open the door to that climb a few days ago. Now, on the horizon there is a glimpse of an increase in official rates that has triggered the Euribor index, key in mortgages in Spain.
Some banks have not been slow to reformulate their mortgage offer to gain profitability. Bankinter and BBVA have lowered the prices of variable mortgages and raised those of fixed ones. It is to be hoped that, given the strong competition in the sector at a time of booming demand, other entities will soon follow in its footsteps. But the experts do not foresee a radical change in the windows at the moment, but small adjustments.
“I don’t think the market is going to change much structurally because, although the Euribor has risen, it is still consistently negative,” says the president of the Spanish Mortgage Association (AHE), Santos González. He maintains that the commercial strategies of the banks will not follow the same path and “some will want to grow in profitability and others in volume.” In his opinion, neither fixed nor variable rates will change much. “Spreads will be more competitive but fixed rates are very well established and even if some go up a bit, they will still be considerably low.”
Bankinter and BBVA have been the first to raise fixed prices and lower variables
The analysts consulted estimate that, despite the acceleration of the 12-month Euribor in recent days, which has gone from -0.43% in early February to -0.3%, the indicator will remain negative during 2022 and at most will reach 0%. The upward trend, they insist, will be gradual. “Until the ECB raises the deposit rate of -0.5%, it is unlikely to see higher movements. And Lagarde is going to try to delay it probably until the end of the year”, declares José Lizán, asset manager at Nordkapp Management.
Be that as it may, the escalation of the Euribor in the face of the monetary normalization that is approaching benefits the banks’ margins, which from now on will favor the offer of variable mortgages just as a few years ago they began to promote the fixed ones to compensate the negative rates and thus scratch profitability.
“Lagarde’s statements change the scenario, and this has already been transferred to the markets, especially in the cost of long-term financing. The banks are beginning to pass on this higher cost to the new fixed mortgages, and we hope that the rest of the entities will follow suit shortly. At the same time, we will surely see more aggressive offers in spreads”, highlights Juan Villén, head of mortgages at Idealista. Likewise, he assures that “consumers could try to change their variable mortgages to fixed ones, to close the risk of future installment increases.”
Fixed mortgages are currently the most contracted, exceeding 60% of the total new production for seven months. They reached a record 68% last July. For its part, the choice of variable mortgages has been falling in recent years, going from being hegemonic to accounting for around 30% of new operations.
Experts see it as likely that this 2022 most contracts will continue to be at fixed rates, although they become progressively more expensive and interest in the variable rate returns. “However, the dominance of fixed interest rates could be compromised at the end of the year,” say those responsible for the mortgage broker Housfy Mortgages. Banks could promote the sale of variables due to the foreseeable general rise in rates.
Analysts believe that the fixed rate will continue to be the most contracted this year
The banks will still take time to notice the recovery of the margins due to the Euribor. Mortgages in balance will become more expensive little by little with the revisions. But experts warn that, for the moment, the ECB has only announced a gradual withdrawal of stimulus and has not yet touched rates, which remain at zero. “It is not yet a problem for savers when it comes to continuing to obtain cheap financing for the purchase of homes,” stresses Lizán.
Philippe Laporte, deputy general financial director of UCI, anticipates that the entities will correct their offers for all their loans, both personal and mortgage. “The question is how far this increase will go and in what period it will take place, which will largely depend on the evolution of inflation in the coming months.” From ING they think that “we must wait to have a clearer picture of the evolution of the Euribor to see how the entities respond with their offer and the response of the clients to a possible movement in this sense”.
New mortgage board
Changes. MyInvestor, with a 95% mortgage, and Openbank, lowering fixed and mixed rates, were the first to make a move on the mortgage board in 2022 before the new message from the ECB.
This week, Bankinter reduced the differential of its variable mortgage by 14 basis points and raised fixed rates between 15 and 20 basis points. In the variable offer, BBVA cut the fixed rate for the first 12 months from 1.99% to 0.99%, and in the fixed offer it raised prices according to the term.
And Ibercaja has launched a campaign with discounts adapted to each client and that make it possible to reduce the interest rate by up to 1.20%.
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