weight new mortgage flat rate reached an unprecedented record in 2022. 70.9% of all signed contracts. Progress skyrocketed in 2020, after many years of dominance by the following. variable interest (They were over 90% of those signed by 2015), but they’re starting to gain ground again, as experts predict for fixed interest rates the ceiling will be around 4%.
The maximum number of loans that pay a certain interest for the entire contract period may have been reached in May of last year and amounted to 75.3% of the total. Then it went down. “Over 4%, fixed mortgages expire. There’s not much point in sticking with rates at this level for 25 or 30 years,” market sources say. As a result of the increase in recent years, fixed rate mortgages are now about a quarter of its total stock loan to buy a house.
There are entities like Caixabank or Banc Sabadell They have been betting to offer stable rate loans for six to seven years. In fact, 90% of those recruited by CaixaBank last year and nearly 80% by Sabadell. In other cases, the offer mixed mortgages, 10-year fixed interest and the rest is variable, it makes more sense for new loans because more interest is paid in the first years than in the last years. Most mortgages in Spain are calculated using the French system; This means that mainly interest is paid during the first third of their maturity and towards the end, the principal is substantially amortized. That’s why, according to experts, it is interesting to initially tie an interest rate as low as possible.
Until a few months ago, fixed rate offers only reached 2% interest, today they exceed 3% and are close to 4%; the dominant floating rate ones start at around 2% or even lower, which acts as a trading hook followed by Euribor + 0.75 or a point difference. And in a short time, things have changed dramatically.
Euribor, the main reference for variable rate mortgages, is now close to 4%. At -0.335% in February of last year, this represents an unprecedented rise that has boosted its price significantly. installments of those with variable mortgages. It increased from 0.66% to 4.5% in one year for approximately 145,000 Euro and Euribor + one point loan type in 30 years: 65% increase from 444 euros per month to 734 eurosCalculate resources from a financial institution.
“In the 90s, variable rate mortgage references were in double digits, but then began to decline with the enactment of Euribor in 1999 and peaked at 5,393% in July 2008. Financial resources, the financial crisis broke out and then 2016′ It also went down again until it hit negative, until it left that area in April of last year.” As a result of all this, Euribor has averaged around 2% in recent years.
According to the latest data from the National Institute of Statistics (INE), 34.5 percent of residential mortgages were made at variable interest rates and 65.5 percent at fixed rates in December. Initially, the average interest rate was 2.18% for variable rate housing loans and 2.93% for fixed rate housing loans.
While fixed-rate mortgages continue to dominate, variable rates have started to gain weight in recent months and now represent one in three new interest rates. After 2020, when both options were very evenly matched, in January 2021, when Euribor was a minimum of -0.5%, most mortgage loans began to favor fixed rate loans. This trend peaked in July 2022, when three out of four mortgages were at a flat rate in anticipation of rising rates. Since then the rate has started to change and has dropped ten points in just four months.
The climb is particularly marked given that Euribor remained negative in the first three months of 2022 and has not exceeded the 0% mark since 2016. This rise in Euribor is due to successive increases in interest rates. interest borne by European Central Bank (ECB)). The price of money currently determined by the monetary asset is 3%, indicating new increases, for example, at the meeting. What will happen next March 16?this could be another 0.50 points.
All this triggered Euribor, which meant paying more interest on variable mortgages, and on top of that, its annual review was at the mercy of the evolution of the reference index. In any case, this option is gaining support again as fixed mortgages become more expensive and banks offer variable mortgages with attractive starter hooks or mixed ones.