Wednesday, December 8

Fixed mortgages are one step away from falling 1%

The new forays into the mortgage war, which has intensified again thanks to successive cuts in fixed-rate and mixed-rate loans, place fixed-rate mortgages one step away from falling from the psychological level of 1 percent.

In recent weeks, Openbank and ING have announced reductions of 10 basis points in their fixed and mixed rate loans.

In the case of Grupo Santander’s digital bank, it makes fixed-rate mortgages stand at 1.15 percent TIN for 15 years and up to 1.35 percent for a period of 26 years.

At the same time, the fixed interest on your mixed-rate mortgage stands at 1.05 NIR percent for the first ten years.

For its part, the Dutch bank also cut its fixed rate credit by another 10 basis points from 1.50 percent to 1.40 percent.

Fixed rate mortgages below 1% only for good profiles

Although it might seem that the limit could be placed at 1 percent, the bank offers mortgages around that figure or even lower.

“We are already facing this scenario, even though the banks do not want to communicate it officially,” explains Estefanía González, Kelisto’s personal finance spokesperson.

As of today, the lowest fixed rate that the entities advertise is 1 percent of the BBVA Fixed Mortgage for a term of up to 15 years.

However, “we are already getting fixed mortgage loans of less than 1 percent for much more common terms, such as 25 and 30 years,” says González.

Even Kutxabank and Liberbank market mortgages with a fixed interest of 0.80 percent for those under 35 years of age in branches and 0.85 percent for older clients.

Unfortunately, not all customers can access these types of offers. It is not that he is a ‘premium’ client, but he must have a good financial profile, with high income.

An offer with an expiration date

The question is whether this attitude of the banks can be sustained over time, especially when the tapering or reduction of purchases by the European Central Bank (ECB) is near.

The answer is that it has an expiration date. Banks are expected to relax next year as the latest movements are due to the attempt by financial institutions to take advantage of the “heat” that the real estate market is experiencing.

Let us remember that the number of operations is already around 40,000, but fundamentally they correspond to replacement housing (that is, purchase and sale operations with the aim of improving) and not so much to new credit from young people.

Meanwhile, the bank achieves fixed customers (the average of a mortgage in Spain is 24 years) who sign new products, either through credit linkage or by having new financial needs (and in this case it is more than likely that do it with your reference bank).

The role of the Euribor

The Euribor, the index to which most mortgages are referenced, it also has a lot to say.

As Miquel Riera, a mortgage expert at HelpMyCash, recalls, “the vast majority of variable mortgages in force in Spain are linked to the Euribor, so their interest rates are very low and banks earn very little money for them.”

In this situation, banking has turned to fixed-rate mortgages, that even if they lower, they earn more money (their interest is still higher than that of the variables), so it still pays to make them cheaper to encourage their hiring.

And even more so that the ECB, even if it reduces the volume of purchases in its December meeting, will still maintain the deposit facility at -0.50 percent for a few more months.