Three mortgages to avoid the biggest bullish delirium of the Euribor

Controlling inflation is the current mission of the European Central Bank (ECB).

Thomas Osborne
Thomas Osborne
22 October 2022 Saturday 16:45
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Three mortgages to avoid the biggest bullish delirium of the Euribor

Controlling inflation is the current mission of the European Central Bank (ECB). His tool to combat it? Raise interest rates, which since 2016 have been at historical lows. But although the objective is to reduce the impact of the general increase in prices on the economy, the immediate consequence that is taking place is a radical change in the catalog of offers from financial institutions.

The Euribor, the mortgage reference index, has entered a clearly upward trajectory causing a rise in the cost of loans for the purchase of a home at a variable rate. Mortgages with a fixed interest are also beginning to lose their attractiveness, after years in which banks have tried to encourage them with very suggestive offers, warn the experts at the financial comparator HelpMyCash.

The interest rate hike, announced by the ECB on September 8, 2022, was the second in less than two months. And it will not be the last one. The monetary authority expects to increase rates even more during its next meetings, so they could still rise up to twice more this year. The next meeting will take place on October 27. On December 15, the last monetary policy meeting of this year will be addressed.

Market expectations and the central bank's own actions inevitably affect the Euribor. The Bank of Spain recently confirmed that the Euribor closed September with a monthly average of 2.233%, which implies reaching its highest level since January 2009, when the index to which most variable mortgages in Spain are referenced stood at 2.622%.

With these data, an example: a person with a 30-year variable mortgage of 150,000 euros and with a differential of 0.99% plus Euribor who has to review will suffer an increase in their monthly payment of around 200 euros, that is, In other words, I would go from paying around 448 euros a month to having to pay almost 650 euros. Over a year, this client will pay more than 2,400 euros extra.

But as the current month of October has gone by, the Euribor has continued its rally. The provisional average with information up to the 19th now amounts to 2.583%. HelpMyCash experts consider that everything points to the continuation of this delirium of increases, since in recent sessions it seems that it is trying to touch 2.7%.

In the medium term the prospects are not better. From the comparator they advise trying to refinance the mortgage to cushion the blow, either with the passage to a fixed rate or with a reduction in the differential.

In any case, and since the banks have begun to make their fixed rates more expensive due to the rise in the Euribor, HelpMyCash recommends contracting it as soon as possible. In this sense, they have selected three mortgages that still have a good price.

Ibercaja's Easy Fixed Mortgage is a good option for those looking for a loan without a great bond. Its interest is a competitive 2.25%, which can be achieved by direct debiting the salary (a minimum of 2,500 euros among all holders) from the second year. Its term is up to 25 years and requires a minimum amount of 100,000 euros.

The BBVA Fixed Mortgage has also been chosen. It has an interest much lower than the market average, between 1.95% at 15 years and 2.05% at 30 years, but it requires bonding. To get that price, you must domicile a salary or pension and take out the home and life insurance offered by the bank itself. If you have a high salary and professional stability, it is possible to negotiate the conditions.

For their part, the experts at HelpMyCash have also chosen the Smart Mortgage at a fixed rate from Evo Banco. It has a very attractive interest rate, 2.45% over 30 years, and is discounted for contracting a series of products. It will subtract 0.10 points for direct debiting the income, 0.20 points for taking out life insurance from the entity and 0.10 more points for taking out home insurance, also from the bank.