this mortgage constant termInterest rates that banks envy in recent years, based on the negative base of Euribor, which is the main reference in housing finance, already started giving ground to variables. The change in trend will not stop there, as the rise in money prices and the new trade policy of financial institutions predict that this will continue over time. The latest data from the Spanish Mortgage Association (AHE), of which the main banks are a part, confirms that last May and variable new operations grew eight-tenths from April, reaching 20.9% of the total. fixed interest methods decreased by the same rate and remained at 79.1%.
May data was pushed by a rebound of up to 23.1% in January, slightly below the first five-month average of 2022, when variable mortgages reached 21.6%. This is the minimum in recent years. While 2021 ended at 25.1%, it reached 64.5% in 2014. Those fixed for more than ten years represented 0.8% of the total that year. Then came the decision of the European Central Bank to set the money price to zero percent in 2016. It was in March, a month after Euribor went negative for the first time in history. Variable mortgages have been a burden on banks because of the low margins they provide. Thus, financial institutions began to implement commercial policies to lure their clients to fixed ones with the benefit of installment security for the life of the loan – no fluctuations and the same amount is paid each month. they are more expensive for the user. At the end of 2016, the variables represented only 46%, almost twenty points less than two years ago.
rates rise
The outlook changed significantly at the beginning of the year, particularly after the outbreak of war in Ukraine and the consolidation of skyrocketing inflation that prompted the ECB to raise interest rates by half a percentage point in July. And it will not stay there, because another rise is expected in the summer. In parallel, Euribor has been advancing the European central bank’s measures for months and remained at 0.852% in June after rebounding by 50 basis points from May. Considering that it was negative around 0.4% just a year ago, the annual increase is significant. As the Spanish Mortgage Association points out, the dominance of flat rate contracts “may tend to soften” in new operations in the medium term, “companies are now adapting their pricing policies to the new operating framework, tightening the bid at a fixed rate”precisely to orient his client to variable mortgages.
Deposit
Bad news for banking users using mortgages turned into good news for those with deposits for the same reasons. And the rise in interest rates will benefit their wages. In this context, the Bank of Spain reminds that Euribor closed June at 85 basis points, which would mean “a difference of approximately 40 percentage points higher than recorded in normal periods compared to interest rates on bank deposits”. Therefore, the banking system “competes to raise money, It will begin to increase deposit fees in the coming months.