It remains at its highest levels since the 2008 crisis, but the Euribor seems to have peaked. It is the third month that documents a similar value, which shows that the curve is slowing down. Those with variable rate mortgages, most of them, have either already suffered their biggest increases or have rushed to improve their mortgage.
Taking an average mortgage with a spread of 0.8%, the Euribor of October 2023 would make the installments more expensive by around €126 per month, which would mean a cost of more than €1,500 additional for next year.
In fact, who just two years ago paid €536, would now pay around €880 per month with a review of the conditions in October. Since the last review, the increase in variable mortgage payments would have already meant paying more than €2,650 additional annually.
Those who have not been able to afford to pay off the mortgage at once have, for the most part, decided to change banks, either through subrogation or by requesting a new mortgage and canceling the previous one. It is the most effective way to switch to a fixed rate or recalculate your mortgage and alleviate the mortgage burden, at least in the short term.
And it will continue to be so as long as the Euribor does not fall, if it ever does. Specialists predict that the variable mortgage benchmark will not return to lower rates until well into 2025.
If you can access the best fixed interest rate on the market, that would be a good path to take. Fixed mortgages continue to be governed as stable products, despite the fact that only very solvent or privileged financial profiles – such as civil servants or senior officials – today have access to interest rates close to 2.50%.
It is debatable, however, whether it is wise to sign a long-term fixed mortgage with higher interest rates. An improvement in conditions in the future would be more expensive if market interest rates fall, since the holder will have to compensate the banking entity for the financial loss that it entails. This does not happen if the mortgage is at a variable rate.
Mixed mortgages are winning the game. It is a financial product with the same guarantees as those we know, but which, due to its formulation, may be the most attractive option to avoid current increases and then change in the medium or long term.
A mixed mortgage guarantees the first few years with a competitive fixed interest rate – from 1.85% TIN – with which a buyer would save these first years from fluctuations. At the same time, the holder will sign a good variable differential in the medium or long term, so that he can change to a fixed rate with more ease.
And the fact is that, by law, the commissions for changing from variable to fixed interest are 0% after the third year of the mortgage and the compensation for repaying a variable mortgage early is 0% from the fifth year of the loan.
