2023-10-12 03:37:26
When setting the price of home loans, banks take into account a series of variables that give them an idea of what the price of money will be in the coming years, allowing them to estimate what interest is profitable for them. charge for a loan that is granted for a term that sometimes reaches 30 years.
One of those most important variables is the IRS o Interest Rate Swap (which in Spanish would be translated as ‘interest swap’), a derivative that gives an idea of what the price of fixed-rate financing will be for a specific term, which can be 1, 2, 3, 4, 5, 7, 10, 15, 20 or 30 years.
[La banca ya vende hipotecas fijas al 5,5% TAE y sólo EVO, Openbank y MyInvestor las ofrecen por debajo del Euríbor]
As they explained from Help My Cashthis indicator measures “the average price at which money is lent in the risk coverage marketwhich is what banks turn to when they want to finance themselves through the so-called swaps (financial derivatives with which two agents exchange money)”.
This variable is currently at historical highs in all terms. In fact, in all of them he touched that level in his last record, that of September, except in the case of the terms of 2, 3 and 4 years, when it was reached last July.
Historical maximum
Taking the longest term, 30 years, as a reference, the IRS is in the 2,914%, according to the latest official data, corresponding to the ninth month of the year. This is the highest level ever reached by this indicator after exceeding the previous maximum, recorded in August, and the one prior to this stage, which was reached exactly ten years ago (2,739%), in the midst of the financial crisis.
The 20-year IRS is at 3.159%, the 15-year IRS at 3.255%, the 10-year IRS at 3.234%, the 7-year IRS at 3.243%, the 5-year IRS at 3.312%, the 4 years at 3.389%, 3 years at 3.527%, 2 years at 3.759% and 1 year at 3.988%.
These indicators reach these levels, which banks look at when establishing the price of fixed mortgages, after beginning to rise in a change in trend that occurred, precisely, in 2022 with the start of the current cycle of increase in the price of money.
In fact, during the period of negative interest rates, some of these values remained below zero for several months.
Increase in mortgage prices
The increase in rates, which resulted in a Euribor the sweet months triggered, has caused many movements in the mortgage world. In the case of fixed loans, it has resulted in a sharp increase in costs.
In December 2021, the cheapest fixed mortgages could be found on the market, although shortly after that was left behind. In February 2022, as soon as the twelve-month Euribor began to move upward, entities began to update the price of their mortgages, lowering the variable ones and raising the fixed ones.
For the price of the latter, the value of the derivative is taken into account. “When the IRS was close to zero, making this risk rate coverage was cheap for banks, so it was worth having mortgage products below 1% and 1.5%. As soon as this coverage shoots up, the risk is much higher, which is why rates are rising,” he explained to this newspaper a few months ago Fernando LopezChief Operating Officer de Gibbons Allbanks.
“Financial entities, when they want to take out a mortgage product, especially at a fixed rate, resort to this type of instrument to be able to set the rate, since, being a derivative product, it is a relationship that exists between financing and a loan. variable and a fixed loan,” he added.
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