A client who five years ago opted for the security and peace of mind of a fixed-rate mortgage over a variable rate has paid an extra cost of just over 14,000 euros in the period. That is the price he has paid so that now five years later he does not have unexpected increases in his fees.
The example is that of a 30-year type mortgage for an amount of 150,000 euros with a fixed rate of 2% and a variable rate of Euribor plus a spread of 1%. The variable loan has paid much more interest because it is during the first part of the mortgage when in each installment the part destined for interest is higher than the part that goes to amortization.
Now, with the rate hikes, the tables will obviously be reversed and the customer with a variable mortgage will pay more than the one with a fixed one. Continuing with the same example, the customer with a variable mortgage in the October review had their monthly installment increased by 235 euros, up to 685. That means a 50% increase.
CaixaBank calculates that the latest rate hikes will cause its clients with variable housing loans to go from allocating 25% of all their income to 30%. During the previous crisis, in 2008, in the sector as a whole, the effort to pay mortgage loans came to represent more than 50%.
As a general rule, banks usually grant mortgages when the installments to be paid do not exceed the income of the signatories by more than a third. A higher amount can make it difficult for the family to assume payments on a regular basis. This is what happened in the previous crisis, when many families lost their homes for not being able to make regular payments.
It is impossible to know how far the Euribor will go, but bankers privately say that it may be close to stabilizing. Actually, the Euribor is an indicator of confidence and anticipates rate hikes. It is the European Interbank Offered Rate (Euro InterBank Offered Rate, in English) and shows the price at which European banks lend money to each other. If they believe that interest rates are going to rise, then they will ask for a higher price to lend money, pushing the index up.
Meanwhile, the Government continues to negotiate with financial institutions formulas to support vulnerable families for whom a quota increase may be unaffordable. The sector, as explained by the CEO of CaixaBank, Gonzalo Gortázar, is committed to supporting measures being limited to vulnerable customers and not being extended to all. Other sources in the sector point out that indiscriminately helping clients with variable mortgages would be unfair with respect to clients who opted for fixed mortgages and who have been overpaying for at least five years.
