He European Central Bank (ECB) announced this Thursday, February 2, after the meeting of the Governing Council, a new rise in official interest rates of 0.5 points, Therefore, they already reach the 3% reference for commercial loans and 2.5% for deposits. A rise that, foreseeably, will not be the last and that has an even greater impact on those who have a mortgage. As a consequence of the consecutive increases in interest rates and the tightening of monetary policy, the Euribor has skyrocketed and has broken the 3% barrier. Thus, customers with a variable mortgage have seen how their installments have increased considerably in the latest reviews, while the conditions for obtaining a fixed-rate mortgage have tightened.
“A scenario that has left mixed mortgages as the great beneficiaries”, detail from the Mortgage department of the Idealista real estate portal. “Our operations follow a similar trend with respect to the total of Spain and what we are seeing is spectacular growth,” says Juan Villén, CEO of idealista/hipotecas.
How these mortgages work
According to the financial comparator iAhorro, More than 30% of the mortgage signatures that are produced now are of a mixed type. A boom that is due, they indicate, to the fact that many entities are offering this type of product to users as fixed mortgages are no longer attractive. This financial product works with a fixed interest during the first years, which can be 5, 10 or 15 years, and a variable rate for the rest of the amortization period.
“The rest of its conditions are similar to those of fixed and variable mortgages: They can finance up to 80% of the purchase, have a term of up to 30 years and may include commissions and associated products”, they add from the HelpMyCash comparator.
A 150% increase in operations
In the month of December, the number of mixed-rate mortgages came to represent 31% of the operations in which Idealista mediated, compared to 10% that were variable. “This represents an increase in the number of operations of 150% compared to the total number of operations in 2021 and an increase of 400% year-on-year”, adds Villén in this regard.
It is therefore confirmed this new trend towards mixed type “As the formula chosen by many families to obtain financing at lower and more stable prices for an initial period of years, to protect yourself from the current uncertainty“. Mixed mortgages have become “an interesting product for consumers in a context of inflation”, since “They solve uncertainty in the medium term and also provide optionality and flexibility”conclude in Idealist.
Looking to the future, Idealista’s mortgage expert forecasts that the upward trend of this product will continue throughout 2023, although it will depend “on the long-term financing costs of the banks”. At the same time, it is confirmed that the contracting of fixed mortgages is being discouraged due to the increase in the cost of the offer available to consumers.