Upload the Euribor, do I choose a fixed or variable mortgage?

Upload the Euribor, do I choose a fixed or variable mortgage?


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Despite being more expensive than the variables, the hiring of fixed mortgages for the purchase of housing It is an upward trend in our country. This type of credit experienced an increase of 14.5% in the annual rate, reaching 40.1% of the total in July, according to the latest data from the INE. If we look back, in 2008, the proportion of mortgages at a fixed rate was only 2.1% for a 97.9% of variable rate. The resulting quotas are higher in the fixed ones than in the variables because the average interest rate registered was 3% for the former compared to 2.36% for the latter. However, with fixed credits the consumer does not take risks in the face of a future rise in interest rates in the euro area.

This increase in the hiring of mortgages at a fixed rate has gone hand in hand with the fall of the Euribor, resulting ina marked trend change from 2016, with the fall to negative territory of the mentioned indicator. There began the boom of mortgages at a fixed rate: the hiring figures up to the previous year moved in a range between 3 and a maximum of 7.4%. In 2016, 23.7% of fixed-rate mortgages were hired up to 38% last year, according to INE figures. However, this could start to change …

Last September, the slight rise in the Euribor was a first warning. The indicator closed at an average rate of -0.166% with the consequent first increase (0.11 euros per month) of mortgages since 2014. This increase was driven by the gradual changes in the policies of the European Central Bank and the consequent application of higher interest rates on the transactions of banks, according to the experts consulted. At the September meeting, Mario Draghi reiterated that the purchase of assets would begin to reduce from this October to finish next January. The ECB president also kept the calendar for interest rates: there will be no movements until the end of summer 2019 or during the time "necessary to ensure the continuation of the sustained convergence of inflation to lower levels, although close, to 2% in the medium term ». "The risk is that rates will rise at a weaker time for the economy," a question that the Council has "briefly" discussed, Draghi said.

The uncertain future of the Euribor

The upward evolution of the Euribor will also affect fixed-rate loans. "If this path continues, variable interest rates will no longer be at a minimum, which will eventually push up fixed rates. That's why, if you want to hire a fixed mortgage, it is advisable to sign it as soon as possible, given that in a few months the banks could offer less attractive interests than the current ones ", says Javier Mezcua, expert of the financial comparator HelpMyCash.

On the foregoing, the financial officer of the financial comparator «Rastreator.com» Víctor López, who has ruled out returning to positive rates, from now until the end of this year, has mentioned that studies such as that of the Economic Forecasting Agency (EFA) suggest that this indicator will continue in negative terrain in 2020.

Mortgages: much more than the interest rate

López has found that when choosing one or the other type of mortgage, criteria such as the interest rate, expectations about the Euribor or how much value is given to the security of payments intervene. In this line, he has recommended for «Customers who plan to pay fast» opt for a variable mortgage, since in this case, the uncertainty about the Euribor would be lower and a lower interest rate would always be paid than that of a fixed rate mortgage.

On fixed-rate mortgages, he believes that this product fits into «Conservative profiles» thatthey want to avoid worrying about the evolution of the Euribor, and for customers "who do not plan to amortize the mortgage". With the nuance, that it is an interest rate as low as possible: "It is not equal to a mortgage rate 2% that of 4%," he said.

For his part, the chief economist of Arcano, Ignacio de la Torre, says that mortgages at a fixed rate are already becoming more expensive in Spain, although not at the same speed as in the United States. "The changes of the ECB are being gradual and this is going to be transferred little by little to mortgage loans. Fixed mortgages are already somewhat more expensive, a process that coincides with the fall of the German bond. " Despite this, De la Torre advises hiring a fixed rate: "Having a variable mortgage is like going down the street without life insurance since we do not know where interest rates are going to be in a few years. I only recommend variable mortgages for a term of three to four years, but for a long-term loan, it is best to hire them at a fixed rate. "

War between banks

However, the last rise of the Euribor has not prevented a reactivation of the banking war by the variable mortgages cheap Last week, Santander launched a housing loan with a differential of 0.79% for operations with financing below 60% of the value of the property. One day later, the digital entity Coinc showed its cards with a cut of 10 points, up to 0.89%. In addition, BBVA began to market a mortgage with a rate of 1.89% in the first year in April, to later go to a 0.89% differential plus Euribor.

The competition between the entities it could also benefit more conservative clients before the possibility that the war is transferred to fixed mortgages. "It is possible that competition among banks keep fixed rates stagnant, even more so if they want to attract clients from other entities or so that their own clients do not go to other banks. In fact, it is something that we have already seen during the second half of this year: some banks like Bankinter, Targobank or Bankia have improved the conditions of their fixed mortgages, "points out the HelpMyCash expert.

On this growing competition, Víctor López («Rastreator.com») is favorable and pointed out that «all benefits for the user are positive». In this line, has warned from the experience of mortgage counseling of this platform «The mortgage is a complex product, which is not only the fee» and has recalled the other costs to be analyzed: opening fees, home, life or similar insurance to be compulsorily subscribed.

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