Variable and mixed mortgages are gaining ground over fixed ones with rising rates

Variable and mixed mortgages are gaining ground over fixed ones with rising rates

Thes mortgages at a fixed rate they represented 72% in August, the last month with data, compared to 28% accumulated by variables. Now, with rising rates and the Euribor on the same path, a change in trend is being considered. Antonio López Ruipérez, promoter of Grupo Negociador (company dedicated to mortgage advice and brokerage)explains that as inflation has gone up, the European Central Bank (ECB) rates have been rising and, therefore, the euribor It goes hand in hand. This has caused, he adds, that the banks have readjusted their offer. López Ruipérez assures that “Many entities, the fixed rate, have practically been removed from the catalog and only offer variable or mixed”.

From Grupo Negociador they understand that whoever is going to sign a loan with a mortgage guarantee must take advantage of the moment. The best, the mixed model. «We have agreed on a mixed-rate mortgage that during the first ten years is 1.60% without a link. It’s going to be below any variable type. And then, a good variable. That means that during the first ten years you benefit from price instability, it can be ten, five or fifteen. You can always change a mortgage from variable to fixed.

The best time to change the mortgage

Anyone who wants to change their mortgage, he warns, must also do so now because in January or February the rates will rise. If someone wants to opt for a fixed-rate mortgage, given the certainty it provides, from Grupo Negociador «we recommend that a fixed rate not be signed above 3%, it is better to take advantage of the negotiations with the banks now. The banks are now only with the war of the variable, now they are so competitive because people come with the issue of the fixed, “explains López Ruipérez. Nor does it rule out hiring “a good variable” for those who can assume the quotabecause “although it can be put at 4%, it will be temporary because it is expected that by 2024 the Euribor will be around 2.10%.”

The Euribor rises very quickly, but reaches usual levels

So far in November, the Euribor has stood at an average of more than 2.8%. Less than a year ago, this index (the reference rate for most European banks to grant loans) was at record lows, at -0.5%. Experts agree that the negative levels of the Euribor are not normal, but the exception, but it has happened that it has gone on for too many years for some to think it is the norm.

Sources explain it cajasurwhich detail that «talking about 3% environments is not at all strange or worrying, but it points to the normalization of an anomalous situation, which was the previous one. What has happened is that we have reached these thresholds in a very short time, instead of a gradual evolution, easier to assimilate.

Mortgages of all kinds

Contrary to what Grupo Negociador contributes, the Cajasur sources consulted state that “at this time We do not perceive major changes in the type of mortgages that our clients prefer: there are those who choose the stability of a fixed interest loan, there are those who continue to prefer a variable loan and there are those who opt for the mixed one. With respect to whether fixed-rate loans tend to disappear, the same sources assert that this will not be the case, “but they will gradually adapt to the new economic scenario and the market will move at reasonable and convergent prices.”

No raises until next year

To provide some certainty, the general secretary of Construcor, Francisco Carmona, indicates that “it does not seem that in the remainder of the year there will be more increases in the Euribor” and that we will have to wait for the first quarter of next year to see the updates. Also expects credit institutions “to be aware of the situation and offer solutions” those who have had their mortgage payments uphill.

On the type of loans that Cordovans usually sign, he emphasizes that “The change has been radical from several years to here”taking into account that now more than 70% are fixed (something that will begin to change), a percentage that in 2017 or 2018 was occupied by variables.

A practical case

When talking about Euribor, interest rates or mortgage conditions, one tends to ignore what is behind it: families that have to juggle to be able to pay the mortgage and cover all their needs. The rise in rates and the Euribor has caused the monthly payments that the people of Cordoba have to assume have skyrocketed in recent months. From Grupo Negociador they give a practical example to understand, in a simple way, how the mortgage payment has become more expensive.

You have to imagine a mortgage loan of 150,000 euros, if you had been paying an average of 1.5% over the past year (on a 30-year mortgage), the monthly payment was 517 euros. Well, this same example now represents a fee to pay of 673 euros because the rate reaches 3.5%.

From Grupo Negociador they explain that if someone has to review their mortgage in the middle of next year, when it is estimated that the Euribor could reach 3.5%, “if you have a 0.50% margin, you are already at 4%» and, therefore, the fee could reach 716 euros.

«And we are talking about 150,000 euros and 30 years, there are people who have set up a 20-year mortgage and have requested 250,000 euros. These people will go from paying 1,200 to 1,515 euros, ”they specify from the company.

Accepting these increases is difficult at times like the present, with runaway inflation and salaries that do not follow the same path. This is explained by Juana Fuentes, from Stop Evictions, who details that, although during the pandemic the activity of the group was somewhat paralyzed, now it has resumed, precisely because of this affectation suffered by mortgages. In this sense, she assures that “many cases are coming to us” of people for whom it is impossible to assume the payment of their mortgage loan.

To this is added, adds Juana Fuentes, that many of the social rental contracts that were signed during the 2008 crisis are also expiring. Asseverates the person in charge of Stop Evictions, “these contracts either disappear or rise too high to be assumed.”


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