The abrupt rise in the Euribor, which has climbed more than two points in half a year, will not affect all variable-rate mortgages equally. The increase will be much greater for consumers with a growing mortgage, a type of financial product in which the installments increase at each review by a certain percentage -between 1.5% and 3%- and which, in addition, usually be referenced to Euribor plus a differential.
These are loans that were marketed especially at the end of the housing bubble at the beginning of the millennium, coinciding at a time when house prices were through the roof and mortgage payments began to be unaffordable for many consumers. "All kinds of alternatives were offered to be able to assume the payment that were detrimental to the consumer," recalls Antonio Luis Gallardo, head of studies for the Association of Financial Users (Asufin).
And one of these formulas was the growing mortgage. There are no official figures on how many outstanding mortgages were formalized with this capital amortization system, but it is estimated that there could be thousands. “Its benefit –says Gallardo- is that you expect the purchasing power of the subscriber to increase over the years and, thanks to that, the impact of the quotas, even if they grow, is less. But if this is not fulfilled and, furthermore, it comes together at a time of rising interest rates like the current one, the impact of the Euribor rise is much higher”.
In this situation is Sandra Fernández, 44 years old and suffering from an acute visual disability that has prevented her from working since last February. After 16 years religiously paying her mortgage loan, she fears that she will not be able to continue doing so when next May they review her monthly payment, which is currently 972 euros. As stated in her mortgage deed, to calculate the annual update of the fee, a complex mathematical formula must be applied, to which the Euribor plus a differential must also be added. “I'm not a mathematician and I don't have higher education or financial training, so it's impossible for me to figure out how much my mortgage will go up,” she says.
Fernández and her husband –Paco- paid 280,000 euros for a rehabilitated 62-square-meter apartment located in Santa Coloma de Gramenet (Barcelona). "At no time did they tell us that the mortgage would be increasing, only that it was at a variable rate," she asserts. She became aware of this peculiarity when the fees continued to increase at each review despite the suppression of the floor clause in 2013 and the drop in Euribor that year.
"The rise in the mortgage is going to be our economic ruin and that of our families," he says with tears in his eyes, while explaining that they forced him to sign the loan with the guarantee of his parents and his in-laws. "They deceived us, they told us that they would only guarantee 20% of the capital, but it was not like that," while adding that he only went to the bank on the day of the signing - a real estate agency acted as an intermediary - and that the notary arrived late.
Nor does Fernández have any hope of being able to benefit from the new aid to alleviate the burden of those with mortgages because the income of his family unit is greater than 29,400 euros, the new ceiling to qualify for the code of good banking practices. The reason is that she earns 790 euros from sick leave and her husband, net 1,500 euros per month. An income with which she, in addition to paying a mortgage that in May will exceed 1,000 euros, she will have to support her two children – 8 and 6 years old.
The Spanish Mortgage Association (AHE) recommends in these cases trying to negotiate the change to a fixed-rate mortgage, despite the fact that "it will probably mean a recapitalization of the credit," says its president, Santos González. Along the same lines, from Asufin they point out that contracting a mortgage loan at a fixed rate – of no more than 3.5% – can be a way out for households with increasing-payment mortgages. And in cases where there are difficulties in meeting the installments, they advise extending the repayment term even if more interest is paid. "You have to try to keep the mortgage payments below 35% of the total household income," advises Gallardo.
The problem that the association is detecting, which values positively the new rescue measures for mortgages for vulnerable families, is that financial institutions tend to accept the change to a fixed rate when it comes to families with a good income. Added to this is the fact that consumers with growing mortgages "have a very marginal weight in the mortgage market, which is why they often go unnoticed despite the fact that there are people with real problems behind them."
In order to gain visibility, consumers with growing shares begin to organize through social networks. Sandra Fernández has managed to unite more than 170 people in a similar situation through a Facebook page. Thus, he has met José Luis Herrero, from Abrera (Barcelona), who contracted a growing mortgage in 2007 for a value of 235,000 euros and whose fee will increase this month by more than 50% due to the effect of Euribor and the application of a percentage -2% per year- that follows from a formula that he claims to be unaware of.
"Change the mortgage bank? I am studying several options, but they are all complications: nobody wants this type of product," he argues. Also, today his home has been devalued since he bought it, which is another obstacle for other entities to accept the change since the amount of the loan cannot exceed 80% of the appraisal price. Nor does it help to have a single family income -of 33,291 gross euros-, also higher than the threshold to benefit from the code of good practices.
Óscar Sánchez, 48 years old and a resident of Sabadell, is another of the consumers trying to find a way out of the growing mortgage he signed in 2006 for an amount of 186,000 euros. "I have 12 years left to finish paying it off, but six years from now my installments will be crazy. The initial forecast was that the last one would be 4,000 euros," he laments. "Regardless of whether he can afford it or not, this is an outrage, a trap, bread for today and hunger for tomorrow."
