“The European Central Bank (ECB) raised official interest rates by 0.5% this month, and if it raises it by another 0.5% in March, rates will reach 3.5%, so it is very likely that we will see some interest rates. levels euribor About 4% before summer”. That’s what Simone Colombelli, director of Mortgages at iAhorro, made after seeing Euribor, the benchmark index for the most used variable mortgages in Europe, stood at 3,524% one day before the end of February. This represents an increase of about 0.2 percentage points compared to January (3,337%) and January data. Highest data since November 2008More than 14 years ago, when this indicator reached 4.3%.
How does this new rise in Euribor affect housing loans? One of the most direct consequences of the ascent of Euribor, Increase in installments on variable mortgages already under contract. For example, in February of last year, Euribor + 0.99% margin, while Euribor was still negative (-0.335%), the person who took a 30-year floating rate mortgage will see this with this review. each month your salary increases significantly: from 459.06 euros to 750.31 euros per month. This means an increase of 291.25 euros per month or an increase of up to 3,495.03 euros a year in the same way.
As a result of the increase in the installments of variable mortgages, the desperation of the mortgagee is hidden. Therefore, the Government of Pedro Sánchez announced that at the end of 2022, 2023 will end during this year. the banks they didn’t get commission from those who wanted to pay back wholly mortgage or successor. Therefore, successions and cancellations are almost free as users will only pay for operational procedures such as appraisals.
What mortgage do banks offer now?
As expected, the increase in Euribor pushes interest rates up on all mortgages, not just variable mortgages. However, Simone Colombelli confirms that “there are a large number of formulas on the market”. attractive offers”. So much so that there are currently many fixed rate mortgages positioned under Euribor in Spain. “Just to give you an idea, many fixed mortgages with TINs below 3% continue to be signed on iAhorro. This is something that doesn’t make much sense on paper, but it’s a long-term vision”, explains the comparator and mortgage adviser’s Mortgage director.
Of course, Colombelli states that operations must be robust and robust for these features to emerge. the customer must have a good profile“For low profiles, fixed mortgages have skyrocketed and we’re already at 4% with many organizations.”
“Despite the sudden growth we’ve seen in recent months, the mortgage market in general has been slow moving and we certainly won’t be returning to 1% or even 2% Euribor in two years; “The most likely thing is for it to continue above 2%,” he said. That’s why Colombelli said, “currently the most attractive product is mixed product”. Financial institutions continue to provide mixed mortgages with a much lower TIN than a 100% fixed mortgage can have. Specifically, a spokesperson for iAhorro says, “although they have risen a bit, many organizations are still positioned below 2% for the first 5-year fixed tranche.”
As for variable mortgages, as Euribor continues to rise and most mortgagers choose not to take risks In order for the panorama to continue as it has so far, “banks offer very low spreads that allow the person who hires them to pay almost exclusively the interest associated with Euribor.”
Debt will skyrocket
The iAhorro Mortgages director’s forecast is for Euribor to reach 4% this spring”, meaning “Debt levels can skyrocketboth people who are already mortgaged, who can also increase their default levels, and those who are mortgaged in the future, who can afford increasingly cheaper homes and may even not mortgage them if the banks are fairer”.
Simone Colombelli explains what this means: “You won’t see big differences in the amount of a small mortgage, but for a mortgage of 200,000 euros or more, the average for cities like Madrid or Barcelona is, financing would be too expensive and hence the cost of the operation”.