The mixed rate mortgage emerged as the leading option in Spain, surpassing fixed and, to a lesser extent, variable rate loans. This shift is reflected in the latest analysis of the Spanish mortgage market by the comparison platform iSavings during the first quarter of 2023. The trend, already visible toward the end of 2022, became clearly evident in February and March this year.
Marcel Beyer, CEO of iAhorro, notes that mixed mortgages gained prominence in the second half of 2022 and that interest from borrowers intensified in the months that followed. According to the iAhorro Index published this January, 40.30% of mortgage loans signed by users who used the comparison tool were at a mixed rate; this figure rose to 64.22% in February and moderated to 53.92% in March.
The iAhorro Index has been the first to document mixed mortgages in Spain because official agencies have not categorized them separately; they are generally recorded as fixed loans for the first term. Based on INE data for January 2023, 67.40% of new mortgages were fixed and 32.60% were variable, the official agency reporting a different framework from the mixed product.
There is growing supply and demand for mixed rate mortgages
Factors driving the rise in mixed mortgages include banks increasingly including this product in their offerings, rising fixed mortgage rates, and the greater collateral protection associated with longer fixed terms. The market is responding to customer demand with more options than ever before.
Institutions such as Laboral Kutxa, TargoBank, CaixaBank, Openbank, ING, Banco Santander, Bankinter, Ibercaja, EVO, and Hipotecas.com have begun offering hybrid mortgages to their clients. Beyer explains that some lenders that did not previously market mixed mortgages have started to do so to stay competitive. iAhorro reported a single fixed initial term mixed mortgage agreement in March this year. When Euribor is added to the fixed difference, the resulting rate remains well below what is typically offered for constant or variable products.
iAhorro has not yet collected extensive data on hybrid mortgage types because they comprise a small share of the market, but first quarter 2023 figures show rising supply and demand. Average mixed rates for January were 1.97% in the fixed tranche, typically covering the first five to ten years of the loan; February saw a slight increase to 2.17%, and March reached 2.25%. Despite these gains, mixed mortgages remain roughly half a percentage point below the rates seen in several 100% fixed housing loans.
Fixed rate mortgages reach around 3% or higher
In 2023, fixed rate loans have become more expensive compared with last year. Yet, as Beyer points out, a sense of stability is returning as banks adjust offerings gradually rather than in dramatic shifts. Between January and March 2023, the average fixed rate signed by iAhorro users stood at 2.65%, up from 2.05% recorded in late 2022. Monthly averages rose from 2.43% in January to 2.76% in February, then leveled at 2.74% in March. Official INE figures for January 2023 show an even higher average of 2.79% for fixed-rate mortgages during that month.
iAhorro emphasizes that its users generally secure better rates than those offered directly by banks. Meanwhile, fixed rate mortgages have lost market share in recent months, dropping from over 80% in the third quarter of 2022 to about 30.39% by March 2023. The mortgage activity tracked by the iAhorro Index confirms these dynamics.
What happened to the variable mortgage
Although Euribor continues to rise, variable rate loans, which combine a floating rate with the Euribor, have maintained a minority position in market share. They accounted for 10 to 15% of loans signed by iAhorro users, with specific shares of 10.45% in January, 13.64% in February, and 15.69% in March.
Looking ahead, the trajectory depends on policy decisions by lenders and by the European Central Bank. The ECB has already raised official rates twice in recent months, with the current rate at 3.5%. Whether further increases occur will influence fixed, floating, and mortgage pricing in the months ahead.