Spaniards with a mortgage are taking advantage of the mortgage relief measures approved by the Government for 2023, which eliminates or reduces the commissions for changing from variable to fixed mortgages, in order to cover their backs against the great revision in March of the cost of mortgages. variable credits, which augurs a significant jump in the installment of variable mortgages due to the strong difference between the euribor at the end of last month and the one that existed on the same date in 2022.
So, the surrogacy figure has shot up 26.3% during the first month of the year compared to December; month in which the extraordinary measures were not in place, although the Euribor already exceeded 3%. In fact, surrogacy fell 12% month-on-month in the last month of last year and 42% for the year as a whole.
The bulk of these changes has been concentrated in subrogations from variable to fixed rate. According to INE data, the number of variable-rate mortgages with registration changes after the rate change fell by almost half in January. In this sense, of the almost 5,000 mortgages that underwent modifications, almost half went from variable to fixed rate. Another 2,200 mortgage loans experienced modifications, but without abandoning the variable rate referenced to the Euribor.
“Of the 12,554 mortgages with changes in their conditions, 39.5% are due to changes in interest rates. After the change in conditions, the percentage of fixed-rate mortgages increases from 11.1% to 50.8% , while that of mortgages at variable interest decreases from 87.9% to 47.8%,” says the INE. Likewise, it stands out that with the subrogations what has been achieved is a reduction in the cost of credit for the purchase of housing. “After the modification of conditions, the average interest on loans on fixed-rate mortgages decreases 0.2 points and that of variable-rate mortgages decreases 0.1 points,” adds the institute.
The Royal Decree that updated the Code of Good Practices included other measures such as the elimination or reduction by the year 2023 of the commissions that the change of the type of credit implies. Likewise, for the most recent mortgages, with less than three years of life, the regulations contemplate a reduction of commissions for the change to a fixed rate from 0.15 to 0.05%. It is considered that this group of mortgaged individuals will suffer the most from the increase in the Euribor, because the bulk of the loan is unamortized, which increases the amount of interest to be paid by the French amortization system.
This trend is not new. The Statistics for both December and November mortgages reflect that in the relative changes to the interest rate, the mortgage debtors gave priority to the fixed rate over the variable one. Although it is true that in January saw the highest number of this type of modifications relating to interest rates, 4,954, while in December they were 3,643. In November the figures were similar: 3,746. Therefore, an acceleration is taking place, even more if possible, if one takes into account that it will be the mortgages that are reviewed with the data for January, February and March, which suffer the most bulky increases in installments.
Variable mortgages would rebound if fixed rates grow
In the event that the Euribor continues to increase, the forecast is that those mortgaged, especially at a variable rate, choose to continue subrogating their contracts more and more to seek to reduce the impact of this rise, either in the mixed or fixed rate. Although, “if it begins to trade downwards and banks do not improve their fixed rates, it is likely that we will see a certain rebound in variable mortgages,” explains Miquel Riera, an expert in mortgages at HelpMyCash financial comparator. “If the banks continue to raise the interest on their fixed mortgages -and they are doing so-it is possible that this modality loses steam in favor of variable and mixed rate offers ”, he adds.
The most profitable loans in the face of financial instability
For their part, from Rastreator they indicate that the most interesting mortgages are currently those at a fixed rate or mixed rate that are below 3%. “There are a number of mortgage offers below 3%, such as the fixed mortgages from Targobank (2.56% APR) or Caixabank (2.84% APR),” they point out. Specifically, the mixed model allows the user to subscribe to the initial stability of the fixed rate at a more attractive interest and, after the passage of the fixed term, the client will be able to evaluate whether to promote a subrogation or a novation to try to reduce the interest cost .