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Friday, January 27, 2023

The best fixed-rate and variable-rate mortgages after the ECB rate hike


The rise in interest rates on the ECB by 50 basis points, twice as much as announced, and the meteoric rise of the EURIBOR are felt mortgage market on several fronts. The benchmark index is averaging nearly 1% in July, compared to -0.491% a year ago, meaning those who already have an adjustable rate mortgage will see a significant increase in installment costs. Specifically, for a loan of EUR 180,000 over 25 years with a margin of 1%, around EUR 120 more per month and around EUR 1,460 more per year are paid.

Fixed-rate mortgage holders are not affected by these changes and continue to pay the same amount throughout the life of the loan. The stability and security that fixed interests offer has motivated their hiring in recent years, and according to data from the National Institute of Statistics (INE), they account for more than 70% of new operations. However, the change in monetary policy has meant that financial institutions have adjusted their offerings. In general, variable options improve and spreads narrow, while fixed rate conditions worsen. And the fact is that banks are now interested in profiting from the rise in Euribor.

In this regard, according to the mortgage comparison service HelpMyCash.com, the best fixed rate mortgages now they are:

Fixed-rate mortgage from imagineBank: CaixaBank’s mobile bank offers 2.17% APR for up to 30 years simply by direct debit from your salary and finances up to 90% of the lower acquisition or appraised value. The request is 100% online from the application.

Evo Smart Mortgage: Bankinter’s 100% digital bank markets an interest rate of 2.33% APR for 25 years as long as paychecks of at least €600 per month are paid and home and life insurance is taken out.

Fixed Simple Mortgage of Ibercaja: If the bonus conditions are met, the fixed interest rate is 2.52% APR for 25 years. The prerequisite is a minimum income of 2,500 euros per month and the conclusion of property damage insurance.

BBVA fixed-rate mortgage: If the pay slip of more than 600 euros per month is paid by direct debit and household contents insurance and installment protection are taken out with the BBVA, the conditions of 2.81% effective annual interest apply for up to 15 years.

Fixed-rate mortgage Coinc: The lowest fixed rate offered by the company is 3.01% APR, but for a 10-year term. No binding.

Openbank fixed-rate mortgage: The Santander Group online company has a discounted fixed rate of 3.10% APR for up to 15 years. It is necessary to take the payslip and contract for home, life and electric and gas utility services insurance with you.

That The most attractive adjustable rate mortgages at the moment are:

Evo Smart Mortgage: It has a premium of 0.75% over Euribor and an initial fixed interest rate of 0.95% for the first 12 months. It requires debiting the salary and taking out household contents insurance.

Pibank Mortgage: Just by opening an account and taking out damage insurance, the company puts on the table a fixed rate of 0.98% for the first 12 months and then a 0.78% difference on Euribor. Finance up to 90% of the acquisition value, maximum 80% of the appraised value.

KutxaBank variable mortgage: With bonuses, it offers Euribor plus a difference of 0.79% in the first year and 0.64% in the rest. Required are: payroll debit of €3,000 or more, contribution to pension plan from €2,400 per year and purchase of home contents insurance.

Coinc variable mortgage: It has a fixed initial interest rate of 1.25% in the first year and a differential of 0.75% plus Euribor the rest of the year. No binding.

Mortgage without backpack MyInvestor: If the mortgage is new, the fixed rate is 1.29% for the first year and then Euribor + 0.89%. In the case of taking out the mortgage to the company (regression), the initial fixed interest rate is 1.09%. A family relationship is not required, but the income of the applicants (individually or jointly) must be more than 4,000 euros.

Open Bank Variable Rate Mortgage: You can get an initial fixed interest rate of 1.60% in the first year and a difference of 0.60% on the Euribor in the rest, provided the loan amount is greater than 150,000 euros and all bonus conditions are met: direct debit of at least 900 euros per month and take out home contents, life, and electric and gas utility service insurance.

The mixed mortgage variant

According to a recent study by mortgage brokerage platform Hipoo, mixed-rate mortgages represent savings of more than €15,000 compared to fixed and variable rates, using an average mortgage of €140,000 over 25 years as a reference.

The study consists of a projection framed by the uncertainty caused by Euribor and the rate hike by the ECB. The values ​​used are real data from the company’s database.

With a fixed interest rate of 2.69%, the value of the mortgage is therefore 192,463 euros, with the total interest at the end of the term of the loan being 52,463 euros.

For the adjustable rate mortgage with a differential of +0.99% plus Euribor, assuming an average Euribor of 1.225% over 25 years, the total interest is 44,533 euros and the total loan is 184,533 euros.

For a mixed mortgage with a fixed interest rate of 2.09% for the first 10 years and a difference of Euribor + 0.89% for the remaining 15 years with a variable tranche, the total result of the interest payable is added up once the mortgage is closed is 36,701 euros, 176,701 euros including capital and interest with an assumed savings of 15,762 euros compared to the fixed-rate mortgage and 7,832 euros compared to the variable-rate mortgage.

mortgage crash

Experts in the real estate industry expect the purchase of real estate and mortgages to slow down next year due to the ECB’s interest rate hikes that have just started. In order to get a grip on high inflation, key interest rates should reach 2% by mid-2023, one of the conclusions of several experts who recently attended the round table on rate hikes and possible recession: “How? Will it have an impact on mortgages and the real estate sector?

Nuria Rocamora, CEO of MyInvestor, claims that “access to housing is becoming more difficult”. For his part, Ferran Font, director of studies at Pisos.com, believes that “everything indicates that we will see a slowdown in sales and mortgages in the coming year.” Silvia Escámez, CEO of Finteca, explains that “of late, fixed-rate offers are more expensive from under 1% at 30 years to offers already over 2%, and there are new upward adjustments every 15 days.” Conditions to encourage variable rates, and many have even withdrawn their offers at a fixed rate.” Faced with this scenario, Finteca’s CEO believes that “Now more than ever, it is important for individuals to negotiate well to achieve that to find the best possible offer, that’s what our analysts do.”

Currently, and according to the latest data from INE, the number of home mortgages signed in May reached 44,165, its highest level in 11 years. Operations rose 24.7%, the highest increase since last January. The data still doesn’t include the ECB’s July 21 interest rate hike.


Source elpais.com

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