raising interest rates not just in the last two years slowed the purchase of new mortgages The province experienced a 12 percent decrease in the first ten months of the year. It was also a reason Increase in partial refunds To avoid the increase in monthly fee as much as possible and in the luckiest case total credit cancellationafter full payment is made.
INE’s latest statistics on this subject leave no room for doubt. They were registered in the state between January and October this year. 18,710 loan cancellations to buy a house, 2,900 more than those counted in the same period in 2021, Before Euribor starts to rise. So an 18 percent increase in just two years is not at all common and does not naturally respond to the increase in end-of-life mortgages.
“Everyone who could repay did so. Faced with the prospect of fees rising rapidly and given the very low profitability offered by banks, people preferred to take the money and payr”, he assures Veronica Rodríguezfrom financial users association till the endReminding that months of isolation and reduced social life during the pandemic caused increase in stored savings in current accounts.
This is a pretty big trend change since the negative rates of recent years. As usual, the mortgagee preferred to keep the money. and they continued paying the mortgage because it didn’t cost them much additional money. Especially for those who purchased before 2013 and can deduct up to 15% of the contribution, this becomes even more profitable for them.
In this sense, partial depreciation was the most common, but as reflected by INE data, there was also a significant increase in total cancellations. More the real increase is even greater It differs from what appears in official data, as many citizens do not bother to record the cancellation (data are obtained from the Property Register) unless they intend to somehow sell or transfer the property.
Less hiring
Regarding new hires, 14,529 loans were granted between January and October To finance the purchase of a house in the province of Alicante 11.7% decrease In the same period of 2022. A decline responding to an increase in mortgage prices rather than a lack of demand It excluded part of the population from the marketThose who cannot afford the monthly fees they need to meet with the new prices.
For example, in the province where the average requested amount is 106,000 euros, an average mortgage with a rate of Euribor plus 1% and a maturity of 25 years has begun to be assumed. The monthly fee increased from 375 euros in December 2021 to almost 603 euros today. That means 226 euros more per month or 2,722 euros per year, figures that not every pocket can afford.
Of course, they’re starting to come for those with mortgages anyway. good news. Unless there is a radical change Euribor will close December around 3.7%This will be the second consecutive decline and, more importantly, the first such an intense decline that it becomes a crisis. real decline monthly payments.
Specifically, the benchmark referenced by the majority of variable interest loans for home purchases will be below its level in June, when it closed at 4.007%. Those with a semi-annual review will see mortgage payments drop. A decrease of the same amount of 106,000 euros would mean approximately: 18 euro less one month.
Those who automatically review their loan rates will have even worse luck. yearlyIn this case, the average mortgage holder in Alicante will have to make several payments as the Euribor remains above the 3.018 level it marked in December last year. 42 euros more Up to the present.
Of course, for now, and as long as the ECB does not dare to reduce the official money rate, everything indicates that the decline in Euribor will be controlled and will remain in the range of 3.7 to 3.5% in the coming months, according to Laura Martínez from iAhorro.
Offers below Euribor to stimulate the market
The decline in mortgage balances has led businesses to improve their offerings to attract business; This has led to the situation where many institutions are offering loans at rates below Euribor, according to Laura Martínez from iAhorro. So, fixed mortgages for customers with a “good profile” (meaning they have sufficient capacity to pay) can be found at prices around 3% or 3.3%, but the real star at the moment is the mortgage mix. So, the first few years are fixed rate, the rest are variable rate. For example, a formula that accounts for up to 70% of loans recommended by this portal. In this case, the interest of the fixed slice is between 2% and 2.5%. Although it may seem paradoxical, it is still profitable for organizations if we take into account that they continue to reward their customers’ savings with much lower figures, and in addition mortgage holders often purchase other types of products, such as insurance. Individual loans or funds owned by the same organization.