If you are thinking of buying a home, it is a good time to get a mortgage in the best conditions. It is the advice of Juan Villén, director of Idealist / mortgages, which analyzes for The Independent the situation of the real estate and mortgage markets at this start of the course.
“There are good prospects for this final stretch of the year.” First, because “consumer interest in buying a home is maintained, and the supply is sufficient for the volume of transactions to remain high,” explains Villén. The pandemic increased household demand for larger, landscaped homes on the outskirts. But the market in city centers remains stable. In addition, “the new construction is growing at levels that we have not seen for fifteen years.”
If 2021 began with the signing of the last operations held back by the pandemic, it enters the last quarter with an added stimulus factor: the inflation forecast. In times of uncertainty “and in the absence of alternative investments, the real estate sector is once again a haven for savers.”
Abundant and ‘cheap’ credit
A second aspect that encourages optimism for this start of the course is the favorable situation of the mortgage context. Banks are very liquid and need to lend. So there is a lot of competition to attract customers. In addition, rates and long-term financing remain low. The entities are making offers of mortgage loans at a fixed rate and 30 years below 1 percent, “says the head of Idealista / mortgages. This strong competition means that very favorable conditions can be negotiated without contracting additional products that are not desired.
It is important to get personalized offers from different banks and contrast all the variables before choosing
juan villén, idealista / mortgages
The scenario also favors those clients who already have a loan and are thinking of moving it to another entity to improve their conditions. “The interest of banks to attract business is moving to subrogations. This normally occurs when there are falls in interest rates. But the entry into force of the new mortgage law, a pro-consumer law that has facilitated and simplified the procedure and requirements, is favoring change. Certain entities have begun to be more aggressive with this policy.
In this credit and interest rate environment, the recurring dilemma, fixed or variable rate, has an easy answer for Villén: « gap or cost difference between one modality and another is at minimum levels. In any case, we recommend that clients opt for a variable mortgage only if they have a sufficient amount of savings or a salary level to take on a possible accelerated rate hike ”.
An obstacle: lack of savings
The pending issue in the Spanish market continues to be access to loans for those clients, usually young, who, although they have a stable income, do not have the necessary initial savings. “After the last crisis, banks learned that they cannot lend to just anyone. Both the Bank of Spain and the ECB maintain close supervision so that the requirements are not relaxed. In this sense, the lack of savings continues to be a handicap to accessing a first home. Although the fees are low and therefore the ability to pay is not a problem, the obstacle is to have that minimum of 20 percent of the total price plus the costs of the operation ”, which in large cities adds up to a minimum of between 50,000 and 60,000 euros.
A problem that for Villén has a difficult solution, at least in our country. «For these cases there have always been three alternatives. One is for an insurer to cover the risk that exceeds the bank’s excess tolerance beyond 80 percent of the total value. After the boom, this type of product left many defaults. It is a common modality in other countries, but right now no Spanish bank is actively offering it.
The second alternative goes through public support. “In the United Kingdom or in Italy there are programs so that, through the state guarantee, banks can lend to young people who buy their first home. This is an issue that comes up in all forums in the sector, but at the moment it does not seem viable, given the situation of public debt that Spain is going through. The third way implies that banks take more risks. Some are testing, offering 40-year terms, trying something more than 80 percent financing… But they are timid advances that do not solve the problem.
In search of the best offer
We are, in short, in a good moment, which will foreseeably extend to 2022, to get a mortgage in the best conditions. Villén recommends planning, researching and comparing before choosing which bank to stay with. «It is not enough to resort to a simple web comparer. There are banks that do not go beyond the conditions they publish, but we are seeing that many are negotiating client to client. So it is important to get personalized offers from different banks and contrast all the variables before choosing. That is part of the philosophy of the service of Idealist / mortgages. We help people to get personalized offers and approvals from multiple banks without kicking the branches. ” All this for free.