What exactly is a variable mortgage, and is it different from a fixed or a mixed mortgage? How do these loans function? A survey conducted by the mortgage comparator iAhorro, involving more than 1,700 respondents, explored these questions as the housing loan market faced shifts following moves by Euribor and the European Central Bank last year.
Although nearly 70 percent of Spain’s active mortgages carry a variable rate, this type remains the least popular option for first-time buyers seeking bank financing. In iAhorro’s survey, only 12.8 percent of participants selected a variable mortgage as their first choice. Mixed mortgages ranked second with 24.2 percent, while fixed-rate mortgages were preferred by 50.3 percent. The remaining 12.7 percent indicated that the type of mortgage was not important to them.
Variable mortgages: common knowledge, but less appealing than hybrid options
Why do many still opt for fixed-rate loans despite higher costs? A mortgage expert at iAhorro explains that the fixed product is straightforward and easy to understand, which makes it more appealing to borrowers. While Spaniards may be more familiar with variable mortgages than with mixed loans, the current environment makes variable products seem riskier. Banks, on the other hand, tend to view mixed mortgages as the most fitting solution for the moment.
In the broader survey, it appears that knowledge gaps influence choices. Among all respondents, 42.9 percent said they know the fixed loan quite well, 19.2 percent know it very well, 29.2 percent feel they know only a little, and 8.7 percent admit knowing nothing. Variable mortgages are still the most common option in Spain, but only 12.1 percent reported knowing a lot about them, while 43.2 percent have some knowledge and 31.9 percent know little. A final 12.8 percent admitted knowing nothing about variable loans.
Mixed mortgages reveal an even starker picture: 69.2 percent of iAhorro survey participants reported knowing very little or nothing about them (37.4 percent and 32 percent, respectively). Yet, hybrid mortgages still led as a contract type with 24.2 percent, ahead of variable loans at 12.8 percent. The remaining 12.7 percent did not care which mortgage type they used.
Latest iAhorro data show a clear preference for mixed mortgages in October, with nearly 72 percent of total contracts falling into that category, compared with 20 percent for fixed mortgages and 8 percent for variable loans in the same month.
Risk perception rising while mortgage knowledge lags
Simone Colombelli, the mortgage manager at iAhorro, highlights another striking result: Spaniards are increasingly unsure about mortgages yet more aware of the risks involved. A quick search for information on variable mortgages can yield an avalanche of data, including Euribor-linked risks, which underscores the need for careful consideration before signing any loan.
When asked how people determine whether they need a mortgage, most respondents pointed to information from their primary bank, with 59.4 percent choosing that route. Google searches followed at 18 percent, while the mortgage comparator and traditional media ranked closely at 8.2 percent and 8.1 percent respectively. Family, friends, or other informal channels accounted for smaller shares, and a few respondents mentioned other questions altogether.
Colombelli notes that people often seek information only when confronted with a problem. A growing number of borrowers visit their banks and accept uncompetitive terms that come with bundled products like payroll accounts, home insurance, life insurance, and even home security services. She concludes that there is much to improve in both knowledge and the availability of independent, valuable information for consumers.