2023-07-20 02:04:05
The unstoppable rise of the Euribor, which has gone from -0.477% at which it closed its price in January of last year to 4.164% at which it transits on average in the month of July, has caused a sudden and forceful increase in the cost of mortgage payments paid by many Spaniards. Some, increasingly, are turning to the alternatives at hand to make them cheaper. To such an extent that both mortgage subrogations -change of financial entity to improve loan conditions- and renegotiations of conditions have doubled.
In the case of the latter, they already account for 7% of new mortgage operations and are well above the average for the 2017-2019 period (3.6%), according to data compiled by CaixaBank Research in its study “Deceleration in the Spanish real estate sector”. In global terms, the research service of the financial institution highlights that the mortgage market is being greatly impacted by the interest rate increases successively approved by the European Central Bank (ECB). Thus, it is worth noting that the mortgage interest rate stood at 3.97% in May 2023 compared to 1.62% a year earlier, the number of mortgages fell by 8.4% year-on-year in the accumulated year to April and, in this same period, the amount of new credit granted to households for home purchases (without renegotiations) fell by 22.7% year-on-year.
entity change
Regarding subrogations, the change of financial institution to improve loan conditions represented 15.2% of the operations signed with idealista/mortgages in June, compared to 9.1% twelve months ago. According to the latest report from the mortgage broker, mortgage subrogations accounted for 11.9% of firms in the whole of the second quarter, compared to 10.7% in the first three months.
The most valued option for subrogations are mixed-rate mortgages, which continue to gain weight in the market. According to idealista/hipotecas, they represented 61.6% of them in the second quarter, compared to 50% in the first three months of the year. This type of mortgage allows you to pay a fixed interest during the first years of the life of the loan and a variable interest during the rest of the repayment period. In recent months, they have gained a lot of weight after the banks have varied their mortgage offer, giving prevalence to variable loans to take advantage of the pull of the Euribor; to the detriment of fixed mortgages. These loans continue to lose ground as a result of the rise in interest rates and have accounted for 28.8% of the subrogations formalized in spring, compared to 31% in the first quarter, and mark the lowest data in the last three years. The same trend has been followed by variable mortgages, which have been the minority option, with 9.6% of the total. In just one quarter, her weight has dropped by almost ten points.
Amortization
Along with renegotiations and subrogations, the other option that many mortgaged with savings have opted for is to repay part of their loans early. Yes, according to data compiled by BBVA Research from those managed by the Bank of Spain, between May and December of last year they reached, on a monthly average, 6,000 million euros, 33% above the same period of the previous year; in February they rose 48% compared to the same month of 2022 and reached 7,200 million euros, according to the latest data published yesterday by iAhorro and collected by the Mortgage Association (AHE) and the Bank of Spain.
The first years of the mortgage are the most appropriate to make the amortizations. The system used in Spain is the French one whereby, during the first years of the mortgage loan, more interest is paid than principal. At the end of the life of the mortgage, this is reversed: more principal is paid than interest. Thanks to this, if instead of amortizing in the tenth year of the mortgage it is done in the fourth, the savings will be much greater.
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