ING Increases Fixed Mortgage Rates as Variable Rates Become More Expensive

The mortgage market suffered a 180 degree turn in 2022. The rise in rates by the European Central Bank (ECB) is making credit more expensive and it is already noticeable in the mortgage offer of entities in Spain. The Euribor has registered a vertiginous rise that has caused it to touch 4% and that those mortgaged at a variable rate have seen their monthly installments increase. But it has also had an impact on new mortgages, both fixed and variable. The former have become more expensive, due to increased demand, as is the case of ING, which in two years has raised its price by 160%.

This increase coincides with a change of bet by ING. The bank reinforces its fixed terms in all its offer. With the increases in the Euribor, citizens looking for a mortgage are opting for fixed-rate ones for the peace of mind of knowing how much they pay each month. This situation is causing fixed-rate mortgages to have increased their prices considerably, while variable-rate mortgages have been lowering their differential.

In the case of ING, the fixed mortgage has a TIN of 3.65% compared to 3.55% a year ago or 1.40% in 2021. These are the interest percentages when the client contracts the mortgage with linked products (payroll direct deposit and purchase life and home insurance). The APR (which takes into account interest and expenses and commissions) in this case increases to 4.33%. If the client prefers not to include any product, the TIN would rise to 4.15% and the APR to 4.25%.

Beyond raising the price of this product, ING has added new fixed terms to its mixed and variable mortgages. From now on, clients will be able to choose between 5, 10, 15 and 20 years for the fixed period of the mixed mortgage; and between 1 or 3 years fixed in the variable mortgage. The bank’s goal is to go one step further in customizing the product “according to the individual situation of each customer.” In addition, from the entity they explain that this new offer makes it easier to maintain the same quota during those years regardless of what interest rates do.

With all these changes, the variable mortgage has two options. The first of these is a TIN the first year of 1.99% and then Euribor +0.59% (the APR stands at 4.80%). If you prefer to pay the same fee for more years, ING offers 2.80% for the first three years and then Euribor +0.69% (the APR would be 4.69%). In the case of the Mixed Orange mortgage, there are four possibilities. The first of them, 2.99% the first five years after Euribor +0.69%. The second option 3.35% the first 10 years and then Euribor +0.79%. The third possibility is 3.45% for the first 15 years and a Euribor +0.79% afterwards. Finally, ING has the option of 3.55% for the first 20 years and then Euribor +0.79%

Less buying and selling of homes due to higher prices

The increase in the cost of mortgage loans (although it can be extended to credits in general) is causing demand to drop. The tightening of conditions by banks also has an influence. This is the objective of the ECB with the rise in rates, that is, that economic activity stops in order to return inflation to 2%. According to the Bank of Spain, the tightening of the conditions applied to loans would have been very intense, especially the increase in cost, which would translate into a certain increase in margins, both in financing to companies and in that granted to homes.

This tightening of the conditions of access to mortgages (especially due to the increase in cost) is one of the reasons why the sale of homes fell in the month of March. According to the National Statistics Institute (INE), The purchase and sale of homes has fallen again in March by 5.7% compared to the same month last year. This indicator has already accumulated two consecutive months in negative and in the first quarter of the year housing transactions registered a decrease of 2.1%.