One of the main dilemmas faced by those interested in purchasing a home with financing is whether to do it now or wait for the upward trend of the Euribor to reverse, at levels similar to those it reached in November 2008 after being above the 4.2%. The main forecasts suggest that the mortgage index will remain high for the remainder of the year and will stagnate or could even begin to decline by 2024. In any case, its evolution will depend on whether the European Central Bank (ECB) decides to undertake new rate hikes. Despite this scenario, it is still possible to find mortgages below 3%, although they are not the most common.
But what is the interest rate that financial institutions are offering on average? According to the latest data published by the Bank of Spain, the weighted average rate - expenses and commissions aside - is close to 4%, a figure that doubles that of the same period in 2022. A percentage that in the case of the fixed mortgage, The one preferred by the majority of consumers since March 2021 is around 3.2%. “A more expensive rate than a year ago but more advantageous than that offered by variable mortgages, taking into account that the Euribor is above 4%,” explains Leire López, analyst at the Spanish Mortgage Association (AHE).
It should be noted, however, that this type of loan has lost steam in recent months as the central bank has tightened its monetary policy, which has made access to financing more difficult and expensive, which has translated into a contraction. of purchases and sales, and has caused the mixed mortgage to gain weight, one in which the interest rate remains unchanged for the first five or ten years and subsequently becomes referenced to Euribor. The main reason is that the price of this product is “somewhat more favorable” than that of the fixed mortgage, says López, at least for a time. The consequence is that the mixed rate “has burst in force” in recent months, since currently 37% of the mortgages signed are mixed, compared to 20% of the total operations they represented just a year ago. .
According to the data managed by Trioteca, financial entities are offering loans of these characteristics with an average fixed interest rate of 2.32% during the first five years of the life of the mortgage. However, it is not gold everything that shines. “The problem with mixed mortgages is that no one can guarantee what interest rate the user will pay when the loan goes into its variable period,” comments the CEO of the digital online mortgage platform, Ricard Garriga. He considers, however, that this is not a sufficient reason to rule out this option.
Bread for today and hunger for tomorrow? Maybe yes, but we must also take into account that the Real Estate Credit Contracts law, in force since June 2019, facilitates the change from fixed to variable mortgage or vice versa and, in addition, reduces the commissions that the bank can charge for cancel the loan early, a measure that benefits those consumers who want to take their mortgage to another entity. Added to this is that the rule establishes a new distribution of expenses: while the client assumes the appraisal and the notarial fees corresponding to the copy of the deed, the financial entities must pay the rest.
Thanks to this legislative change, Garriga argues, “the vast majority can divorce their mortgage,” especially those who once contracted a variable loan referenced to Euribor and who have seen how in just over a year the monthly payments have increased. in several hundred euros. Even so, official statistics indicate that 19% of mortgage loans formalized today are signed at a variable rate - with a differential of 0.5% on average, according to Trioteca. “As a hook, entities usually offer a fixed rate the first year, which can be very low,” explains AHE.
Taking into account the characteristics of the current mortgage offer, it is logical that consumers consider which are the cheapest loans at the moment. Consulting comparators and rankings of this type of products can be a good start, although the offers that are promoted tend to be “quite far from reality,” warns Garriga. In this sense, he argues that the conditions and characteristics of credit depend largely on the client's economic situation. And it is the most solvent profiles that can still find loans at a fixed nominal interest rate of less than 3% or even 2%. For example, a couple who earns 6,000 euros per month and who finances a maximum of 80% of the purchase price of the property with a repayment period of 30 years can qualify for a rate of 2.6%. “For more standard incomes, fixed mortgages are being given at 3%,” they add from Trioteca.
But what at first glance seems like a bargain can end up being expensive. To avoid this, we must pay attention to additional products - such as insurance and credit cards - that financial institutions require to contract to obtain interest rate discounts. The reason is that “they make the final price more expensive” according to a study by the Association of Financial Users (Asufin). “And, in addition, they are especially offered at the time of renegotiating or changing the bank mortgage to reduce the interest rate,” the consumer association warns. For all these reasons, experts always advise getting good advice before taking out a mortgage.
